The biggest coal station in the UK is powered mainly by wood pellets at the moment. Drax Group Plc, the owner of the power station, still has to find out if the complete transition of another unit to run on renewable fuel is possible.
Drax’s North Yorkshire-based plant was 70% provided with biomass during the first half of 2016, compared to the 37% of the same period from 2015. Meanwhile, the company had upgraded a third unit to run on wood pellets, according to Bloomberg.
The UK wants to close all of its coal-fired plants by 2025 and Drax moved its business to biomass as to open for new growth markets. But it’s a big challenge once with the falling power prices and the regulatory uncertainties. The underlying profit of Drax has decreased by 59% while the revenue declined 2% during the first half of 2016.
At the moment, Drax seeks supply contracts on long terms with biomass generators in Japan, South Korea, Belgium and the Netherlands.
During the first half of the year, Drax’s coal generation dropped 61% to 3.4 terawatt hours, compared with 8.8 terawatt hours in the same period in 2015. U.K. power generation from coal dropped to zero overnight on May 10 for the first time since at least 2009, as reported by Bloomberg.
The biomass power generated by Drax supplied nearly 20% of renewables and 8% of the total power in the UK. These percentages are expected to grow in the near future, while Drax expects European Union approval in autumn for U.K. support in converting a third unit to biomass. The Brexit vote isn’t a risk for the biomass plants, as Drax’s Chief Executive Officer Dorothy Thompson said.
“Our core business is about supplying affordable renewable power to U.K. customers,” said the CEO, who’s hedged Drax against currency risk to guard against pound depreciation. “We don’t see that being materially affected by Brexit.”
Coal use in the second half of the year depends on the cost effectiveness and also the degree to which Drax is needed for system support,