Tag: biomass energy

From Princeton, for Princeton: our commitment to local wood pellet supply

As part of our commitment to support local communities, Drax has organized three community pellet sales days at our Princeton plant. These days are an effort to ensure our neighbours in Princeton can enjoy a safe and warm heating season.

At Drax, safety is our top priority. With our bagging line closing, we want to ensure that community members can access pellets to heat their homes in a safe manner.

“Drax is committed to producing local pellets for our local community,” said Liezl van Wyk, VP of Northern Operations for Drax. “We’re committed to producing for Princeton and working with the community to find a distributor to sell our pellets locally.”

Our community pellet sales days offer half tonne or one tonne totes of pellets at a wholesale rate to our local Princeton community. At our September 15 sales day our plant team sold over 60 units.

“The day was a complete success – the customers were great and our Drax team’s presence was a big part of why the day went so well!” said Princeton Plant Manager Richard White.

The interest was so high that many community members showed up before we officially opened and sold us out of the 24 totes the plant team had pre-filled the day before.

Our remaining community pellet sales days are scheduled for October 13 and November 17. Community members can purchase half tonne totes for $125 or one tonne totes for $250. Our plant team will assist our community members in loading the totes onto their trailers or pickup trucks.

The key to sustainable forests? Thinking globally and managing locally

Key takeaways:

  • Working forests, where wood products are harvested, are explicitly managed to balance environmental and economic benefits, while encouraging healthy, growing forests that store carbon, provide habitats for wildlife, and space for recreation.
  • But there is no single management technique. The most effective methods vary depending on local conditions.
  • By employing locally appropriate methods, working forests have grown while supporting essential forestry industries and local economies.
  • Forests in the U.S. South, British Columbia, and Estonia all demonstrate how local management can deliver both environmental and economic wins.

Forests are biological, environmental, and economic powerhouses. Collectively they are home to most of the planet’s terrestrial biodiversity. They are responsible for absorbing 7.6 billion tonnes of carbon dioxide (CO2) equivalent per year, or roughly 1.5 times the amount of CO2 produced by the United States on an annual basis. And working forests, which are actively managed to generate revenue from wood products industries, are important drivers for the global economy, employing over 13 million people worldwide and generating $600 billion annually.

But as important as forests are globally, the key to maximizing working forests’ potential lies in smart, active forest management. While 420 million hectares of forest have been lost since 1990 through conversion to other land uses such as for agriculture, many working forests are actually growing both larger and healthier due to science-based management practices.

The best practices in working forests balance economic, social, and environmental benefits. But just as importantly, they are tailored to local conditions and framed by appropriate regional regulations, guidance, and best-practice.

The following describes how three different regions, from which Drax sources its biomass, manage their forests for a sustainable future.

British Columbia: Managing locally for global climate change

British Columbia is blanketed by almost 60 million hectares of forest – an area larger than France and Germany combined. Over 90% of the forest land is owned by Canada’s government, meaning the province’s forests are managed for the benefit of the Canadian people and in collaboration with First Nations.

From the province’s expanse of forested land, less than half a percent (0.36%) is harvested each year, according to government figures. This ensures stable, sustainable forests. However, there’s a need to manage against natural factors.

Click to view/download

In 2017, 2018, and 2020 catastrophic fires ripped through some of British Columbia’s most iconic forest areas, underscoring the threat climate change poses to the area’s natural resources. One response was to increase the removal of stands of trees in the forest, harvesting the large number of dead or dying trees created by pests that have grown more common in a warming climate.

By removing dead trees, diseased trees, and even some healthy trees, forest managers can reduce the amount of potential fuel in the forest, making devastating wildfires less likely. There are also commercial advantages to this strategy. Most of the trees removed are low quality and not suitable for processing into lumber. These trees can, however, still be used commercially to produce biomass wood pellets that offer a renewable alternative to fossil fuels. This means local communities don’t just get safer forests, they get safer forests that support the local economy.

The United States: Thinning for healthier forests

The U.S. South’s forests have expanded rapidly in recent decades, largely due to growth in working forests on private land. Annual forest growth in the region more than doubled from 193 million cubic metres of wood in 1953 to 408 million cubic meters by 2015.

This expansion has occurred thanks to active forest product markets which incentivise forest management investment. In the southern U.S. thinning is critical to managing healthy and productive pine forests.

Thinning is an intermediate harvest aimed at reducing tree density to allocate more resources, like nutrients, sunlight, and water, to trees which will eventually become valuable sawtimber. Thinning not only increases future sawtimber yields, but also improves the forest’s resilience to pest, disease, and wildfire, as well as enhancing understory diversity and wildlife habitat.

Click to view/download

While trees removed during thinning are generally undersized or unsuitable for lumber, they’re ideal for producing biomass wood pellets. In this way, the biomass market creates an incentive for managers to engage in practices that increase the health and vigour of forests on their land.

The results speak for themselves: across U.S. forestland the volume of annual net timber growth 36% higher than the volume of annual timber removals.

A managed working forest in the US South

Estonia: Seeding the future

Though Estonia is not a large country, approximately half of it is covered in trees, meaning forestry is integral to the country’s way of life. Historically, harvesting trees has been an important part of the national economy, and the government has established strict laws to ensure sustainable management practices.

These regulations have helped Estonia increase its overall forest cover from about 34% 80 years ago to over 50% today. And, as in the U.S. South, the volume of wood harvested from Estonia’s forests each year is less than the volume added by tree growth.

Sunrise and fog over forest landscape in Estonia

Sunrise and fog over forest landscape in Estonia

Estonia has managed to increase its growing forest stock by letting the average age of its forests increase. This is partially due to Estonia having young, fast-growing forests in areas where tree growth is relatively new. But it is also due to regulations that require harvesters to leave seed trees.

Seed trees are healthy, mature trees, the seeds from which become the forest’s next generation. By enforcing laws that ensure seed trees are not harvested, Estonia is encouraging natural regeneration of forests. As in the U.S. South protecting these seed trees from competition for water and nutrients means removing smaller trees in the area. While these smaller trees may not all be suitable for lumber, they are a suitable feedstock for biomass. It means managing for natural regeneration can still have economic, as well as environmental, advantages.

Different methods, similar results

Laws, landownership, and forestry practices differ greatly between the U.S. South, British Columbia, and Estonia, but all three are excellent examples of how local forest management contributes to healthy rural economies and sustained forest coverage.

While there are many different strategies for creating a balance between economic and environmental interests, all successful strategies have something in common: They encourage healthy, growing forests.

Supporting a circular economy in the forests

Every year in British Columbia, millions of tonnes of waste wood – known in the industry as slash – is burned by the side of the road.

Land managers are required by law to dispose of this waste wood – that includes leftover tree limbs and tops, and wood that is rotten, diseased and already fire damaged – to reduce the risks of wildfires and the spread of disease and pests.

The smoke from these fires is choking surrounding communities – sometimes “smoking out entire valleys,” air quality meteorologist from BC’s Environment Ministry Trina Orchard recently told iNFOnews.ca.

It also impacts the broader environment, releasing some 3 million tonnes of CO2 a year into the atmosphere, according to some early estimates.

Slash pile in British Columbia

Landfilling this waste material from logging operations isn’t an option as it would emit methane – a greenhouse gas that is about 25 times more potent than CO2. So you can see why it ends up being burned.

In its Modernizing Forest Policy in BC, the government has already identified its intention to phase out the burning of this waste wood left over after harvesting operations and is working with suppliers and other companies to encourage the use of this fibre.

This is a very positive move as this material must come out of the forests to reduce the fuel load that can help wildfires grow and spread to the point where they can’t be controlled, let alone be extinguished.

The wildfire risk is real and growing. Each year more forests and land are destroyed by wildfire, impacting communities, nature, wildlife and the environment.

In the past two decades, wildfires burned two and a half times more land in BC than in the previous 50-year period. According to very early estimates, emissions from last year’s wildfires in the province released around 150 million tonnes of CO2 – equivalent to around 30 million cars on the road for a year.

Alan Knight at the log yard for Lavington Pellet Mill in British Columbia

During my recent trip to British Columbia in Canada, First Nations, foresters, academics, scientists and government officials all talked about the burning piles of waste wood left over after logging operations.

Rather than burning it, it would be far better, they say, to use more of this potential resource as a feedstock for pellets that can be used to generate renewable energy, while supporting local jobs across the forestry sector and helping bolster the resilience of Canada’s forests against wildfire.

I like this approach because it brings pragmatism and common sense to the debate over Canada’s forests from the very people who know the most about the landscape around them.

Burning it at the roadside is a waste of a resource that could be put to much better use in generating renewable electricity, displacing fossil fuels, and it highlights the positive role the bioenergy industry can play in enhancing the forests and supporting communities.

Drax is already using some of this waste wood – which I saw in the log yard for our Lavington Pellet mill in British Columbia. This waste wood comprises around 20% of our feedstock. The remaining 80% comes from sawmill residues like sawdust, chips and shavings.

Waste wood for pellets at Lavington Pellet Mill log yard

It’s clear to me that using this waste material that has little other use or market value to make our pellets is an invaluable opportunity to deliver real benefits for communities, jobs and the environment while supporting a sustainable circular economy in the forestry sector.

Refinancing of Pinnacle Debt with Lower Cost ESG Facility

Demopolis wood pellet plant being constructed

RNS Number: 9930E
Drax Group plc
(“Drax” or the “Group”; Symbol:DRX)

Drax is pleased to announce that it has completed the refinancing of the Canadian dollar facilities it acquired as part of the Group’s acquisition of Pinnacle Renewable Energy Inc. (Pinnacle) in April 2021.

The new C$300 million term facility (“the Facility”) matures in 2024, with an option to extend by two years(1), and has a customary margin grid referenced over CDOR(2).

A Pinnacle wood pellet plant

A Pinnacle wood pellet plant

The Facility reduces further the Group’s all-in cost of debt to below 3.5% and includes an embedded ESG component which adjusts the margin payable based on Drax’s carbon intensity measured against an annual benchmark.

The Facility, along with surplus cash, replaces Pinnacle’s approximately C$435 million facilities which had a cost of over 5.5%.

Enquiries

Drax Investor Relations: Mark Strafford

+44 (0) 7730 763 949

Media

Drax External Communications: Ali Lewis

+44 (0) 7712 670 888

Website: www.Drax.com

END

What is bioenergy with carbon capture and storage (BECCS)?

What is bioenergy with carbon capture and storage (BECCS)? 

Bioenergy with carbon capture and storage (BECCS) is the process of capturing and permanently storing carbon dioxide (CO2) from biomass (organic matter) energy generation.

Why is BECCS important for decarbonisation? 

When sustainable bioenergy is paired with carbon capture and storage it becomes a source of negative emissions, as CO2 is permanently removed from the carbon cycle.

Experts believe that negative emissions technologies (NETs) are crucial to helping countries meet the long-term goals set out in the Paris Climate Agreement. As BECCS is the most scalable of these technologies this decade, it has a key role to play in combating climate change.

How is the bioenergy for BECCS generated?

Most bioenergy is produced by combusting biomass as a fuel in boilers or furnaces to produce high-pressure steam that drives electricity-generating turbines. Alternatively, bioenergy generation can use a wide range of organic materials, including crops specifically planted and grown for the purpose, as well as residues from agriculture, forestry and wood products industries. Energy-dense forms of biomass, such as compressed wood pellets, enable bioenergy to be generated on a much larger scale. Fuels like wood pellets can also be used as a substitute for coal in existing power stations.

How is the carbon captured?

BECCS uses a post-combustion carbon capture process, where solvents isolate CO2 from the flue gases produced when the biomass is combusted. The captured CO2 is pressurised and turned into a liquid-like substance so it can then be transported by pipeline.

How is the carbon stored?

Captured CO2 can be safely and permanently injected into naturally occurring porous rock formations, for example unused natural gas reservoirs, coal beds that can’t be mined, or saline aquifers (water permeable rocks saturated with salt water). This process is known as sequestration.

Over time, the sequestered CO2 may react with the minerals, locking it chemically into the surrounding rock through a process called mineral storage.

BECCS fast facts

  • Two 600+ megawatt (MW) biomass units, upgraded with carbon capture technology, could deliver 40% of the negative emissions the Climate Change Committee indicates will be needed from BECCS for the UK to reach net-zero by 2050
  • BECCS has the potential to remove 20-70 million tonnes of CO2 per year in the UK by 2050
  • All National Grid’s Net Zero Future Energy Scenarios (FES) deploy BECCS by 2028 and see a rapid increase in capacity in the 2030s
  • There are 70 billion tonnes of potential CO2 storage space around the UK, according to the British Geological Survey

Is BECCS sustainable?

 Bioenergy can be generated from a range of biomass sources ranging from agricultural by-products to forestry residues to organic municipal waste. During their lifetime plants absorb CO2 from the atmosphere, this balances out the CO2that is released when the biomass is combusted.

What’s crucial is that the biomass is sustainably sourced, be it from agriculture or forest waste. Responsibly managed sources of biomass are those which naturally regenerate or are replanted and regrown, where there’s a increase of carbon stored in the land and where the natural environment is protected from harm.

Biomass wood pellets used as bioenergy in the UK, for example, are only sustainable when the forests they are sourced from continue to grow. Sourcing decisions must be based on science and not adversely affect the long-term potential of forests to store and sequester carbon.

Biomass pellets can also create a sustainable market for forestry products, which serves to encourage reforestation and afforestation – leading to even more CO2 being absorbed from the atmosphere.

Go deeper:

  • The triple benefits for the environment and economy of deploying BECCS in the UK.
  • How BECCS can offer essential grid stability as the electricity system moves to low- and zero-carbon sources.
  • Producing biomass from sustainable forests is key to ensuring BECCS can deliver negative emissions.
  • 5 innovative projects where carbon capture is already underway around the world
  • 7 places on the path to negative emissions through BECCS

Robust trading and operational performance in Q1-2021, progressing biomass strategy

RNS Number : 0962W
Drax Group plc
(“Drax” or the “Group”; Symbol:DRX)

Highlights

  • Robust trading and operational performance during the first three months of 2021
  • Completion of acquisition of Pinnacle Renewable Energy Inc. (Pinnacle)
  • Strong balance sheet and cash flows
    • Continue to expect net debt to Adjusted EBITDA(1) of around 2 x by the end of 2022
  • Continued focus on clean energy generation and a reduction in carbon emissions
    • Commercial coal generation ended in March 2021, with full closure in September 2022
    • Sale of existing gas generation assets in January 2021
  • Sustainable and growing dividend
    • Final dividend of 10.3 pence per share – subject to shareholder approval at AGM
    • Total dividends of 17.1 pence per share, 7.5% y-o-y growth

Will Gardiner, Drax Group CEO, said:

“In the first quarter of 2021 we delivered a robust trading and operational performance, alongside steps to further decarbonise the business and support our flexible and renewable generation strategy. These include the end of commercial coal generation, the sale of our gas power stations and just last week we acquired leading Canadian biomass producer Pinnacle Renewable Energy Inc.

Drax Group CEO Will Gardiner in the control room at Drax Power Station

Drax Group CEO Will Gardiner in the control room at Drax Power Station [Click to view/download]

“The acquisition of Pinnacle positions Drax as the world’s leading sustainable biomass generation and supply business. This advances our strategy to increase self-supply, reduce our own cost of biomass production and create a long-term future for sustainable bioenergy, which will pave the way for the development of negative emissions from Bioenergy with Carbon Capture and Storage (BECCS). BECCS at Drax would make a significant contribution to the UK reaching its new target to cut carbon emissions by 78% by 2035.”

Trading, operational performance and outlook

The trading and operational performance of the Group has been robust in the first three months of 2021. Full year expectations for the Group remain underpinned by continued good operational availability for the remainder of 2021.

Generation

Drax’s generation portfolio has performed well with good asset availability and optimisation across its portfolio, including a strong system support performance from Cruachan (pumped storage), underpinning a solid financial performance.

During the summer Drax will, as previously announced, undertake planned maintenance on its CfD(2) biomass unit, including a high-pressure turbine upgrade to reduce maintenance costs and improve thermal efficiency, contributing to lower generation costs for Drax Power Station.

In March 2021 Drax secured Capacity Market agreements for its hydro and pumped storage assets worth around £10 million for the delivery period October 2024 to September 2025.

Drax also secured 15-year agreements for three new 299MW system support Open Cycle Gas Turbine (OCGT) projects in England and Wales. As the UK transitions towards a net zero economy it will become increasingly dependent on intermittent renewable generation.  As such, fast response system support technologies, such as these OCGTs, are increasingly important in enabling the UK energy system to run more frequently and securely on intermittent renewable generation. Drax is continuing to evaluate options for these projects including their potential sale.

Pellet Production

Pellet Production has performed well with good production and cost reduction plans on track.

On 13 April 2021, Drax completed its acquisition of Pinnacle. The acquisition advances the Group’s biomass strategy by more than doubling its sustainable biomass production capacity, significantly reducing its cost of production and adding a major biomass supply business, underpinned by long-term third-party supply contracts.

The Group’s enlarged supply chain will have access to 4.9 million tonnes of operational capacity from 2022. Of this total, 2.9 million tonnes are available for Drax’s self-supply requirements in 2022 (increasing to 3.4 million tonnes in 2027).

The acquisition positions Drax as the world’s leading sustainable biomass generation and supply business alongside the continued development of its ambition to be a carbon negative company by 2030, using BECCS.

Pinnacle’s performance in the first three months of 2021 was in line with Drax’s expectations through the acquisition process. Drax will update on full year expectations including Pinnacle at its half year results on 29 July 2021.

Customers

The Group’s I&C(3) supply business performed well. It continues to provide a route to market for Drax’s power and renewable products to high credit quality counterparties as well as opportunities to complement the Group’s system support capabilities.

Trading desk at Haven Power, Ipswich

Trading desk at Haven Power, Ipswich

The SME(4) supply business continued to be affected by the ongoing Covid-19 restrictions in the first three months of 2021. Drax is continuing to explore operational and strategic options for this segment of the business.

Balance sheet

As at 31 March 2021, Drax had cash and total committed facilities of £801 million.

Drax will retain Pinnacle’s existing debt facilities within the enlarged Group’s capital structure but will consider opportunities to optimise its balance sheet with lower cost sources of debt.

Drax continues to expect net debt to Adjusted EBITDA to return to its long-term target of around 2 x by the end of 2022.

Generation contracted power sales

As at 16 April 2021, Drax had 25.7TWh of power sales contracted at £49.0/MWh as follows:

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Capital allocation and dividend

The Group remains committed to the capital allocation policy established in 2017, through which it aims to maintain a strong balance sheet; invest in the core business; pay a sustainable and growing dividend and return surplus capital beyond investment requirements to shareholders.

A final 2020 dividend of 10.3 pence per share was proposed in the 2020 results on 25 February 2021 and, subject to shareholder approval at today’s Annual General Meeting, will be paid on 14 May 2021.

An interim dividend of 6.8 pence per share was paid on 2 October 2020, making the total 2020 dividend 17.1 pence per share, an increase of 7.5% compared to 2019.

Enquiries:

Drax Investor Relations: Mark Strafford

+44 (0) 1757 612 491

Media:

Drax External Communications: Ali Lewis

+44 (0) 7712 670 888

Website: www.drax.com/ca

END

The world’s leading sustainable biomass generation and supply business

Today we completed a transformational deal – our acquisition of Canadian biomass pellet producer Pinnacle Renewable Energy.

I’m very excited about this important acquisition and welcoming our new colleagues to the Drax family – together we will build on what we have already achieved, having become the biggest decarbonisation project in Europe and the UK’s largest single site renewable power generator as a result of us using sustainable biomass instead of coal.

The deal positions Drax as the world’s leading sustainable biomass generation and supply business – making us a truly international business, trading biomass from North America to Europe and Asia. It also advances our strategy to increase our self supply, reduces our biomass production costs and creates a long-term future for sustainable biomass – a renewable energy source that the UN’s IPCC says will be needed to achieve global climate targets.

It’s also an important milestone in Drax’s ambition to become a carbon negative company by 2030 and play an important role in tackling the global climate crisis with our pioneering negative emissions technology BECCS.

That’s because increasing our annual production capacity of sustainable biomass while also reducing costs helps pave the way for our plans to use bioenergy with carbon capture and storage (BECCS) at Drax.

Negative emissions from BECCS are vital to address the global climate emergency while also providing the renewable electricity needed for a net zero economy, supporting jobs and clean growth in a post-Covid recovery.

Inside a Pinnacle pellet mill

Inside a Pinnacle pellet mill

We already know Pinnacle well – it is one of our key suppliers and the company is a natural fit with Drax.

Our new colleagues have a wealth of operational and commercial expertise so I’m looking forward to seeing what we can achieve together.

We will benefit from Pinnacle’s scale, operational efficiency and low-cost fibre sourcing, that includes a high proportion of sawmill residues. In 2019, Pinnacle’s production cost was 20% lower than Drax’s.

Completing this deal will increase our annual production capacity to 4.9 million tonnes of sustainable biomass pellets at 17 plants in locations across Western Canada and the US South – up from 1.6Mt now.

It also expands our access to three major North American fibre baskets and four export facilities, giving us a large and geographically diversified asset base, which enhances our sourcing flexibility and security of supply.

This positions us well to take advantage of the global growth opportunities for sustainable biomass. The market for biomass wood pellets for renewable generation in Europe and Asia is expected to grow in the current decade, principally driven by demand in Asia.

Biomass wood pellet storage dome, Drax Power Station

Biomass wood pellet storage dome, Drax Power Station

We believe that with increasingly ambitious global decarbonisation targets, the need for negative emissions and improved understanding of the role that sustainably sourced biomass can play, will result in continued robust demand.

Pinnacle is already a key supplier of wood pellets to other markets with C$6.7 billion of long-term contracts with high quality Asian and European customers, including Drax, and a significant volume contracted beyond 2027.

Drax aims to leverage Pinnacle’s trading capability across its expanded portfolio. We believe that the enlarged supply chain will provide greater opportunities to optimise the supply of biomass from its own assets and third-party suppliers.

The transport and shipping requirements of the enlarged company will provide further opportunities to optimise delivery logistics, helping to reduce distance, time, carbon footprint and cost.

Train transporting biomass wood pellets arriving at Drax Power Station

Importantly – there will also be opportunities to share best practice and drive sustainability standards higher across the group.

We recognise that the forest landscape in British Columbia and Alberta is different to the commercially managed forests in the south eastern US where we currently operate.

In line with our world leading responsible sourcing policy, Drax will work closely with environmental groups, Indigenous First Nation communities and other stakeholders and invest to deliver good environmental, social and climate outcomes in Pinnacle’s sourcing areas.

We are determined to create a long-term future for sustainable biomass and deliver BECCS –  the negative emissions technology that will be needed around the world to meet global climate targets. The acquisition of Pinnacle takes us a big step forward in achieving our goals.


Read press release: Drax completes acquisition of Pinnacle Renewable Energy Inc.


 

Completion of the acquisition of Pinnacle Renewable Energy Inc.

Pinnacle named ship

RNS Number : 2689V 
Drax Group plc
(“Drax” or the “Group”; Symbol:DRX)

Drax is pleased to announce that it has completed the acquisition of the entire issued share capital of Pinnacle Renewable Inc.

The Acquisition was originally announced on 8 February 2021.

Enquiries:

Drax Investor Relations: Mark Strafford

+44 (0) 7730 763 949

Media:

Drax External Communications: Ali Lewis

+44 (0) 7712 670 888

 

Satisfaction / waiver of conditions in relation to the proposed acquisition of Pinnacle Renewable Energy Inc.

RNS Number : 6420U
Drax Group plc
(“Drax” or the “Group”; Symbol:DRX)

On 8 February 2021, Drax announced that it had entered into an agreement to acquire the entire issued share capital of Pinnacle Renewable Energy Inc. (the “Acquisition”). On 31 March 2021, Drax announced that the Acquisition had been approved by Drax Shareholders at the General Meeting and Pinnacle announced that the Acquisition had been approved by Pinnacle Shareholders.

Drax is pleased to announce that on 6 April 2021 the Supreme Court of British Columbia granted the Final Order. All of the conditions to the Completion of the Acquisition have now been satisfied or waived (other than conditions which can only be satisfied at Completion) and Completion is expected to occur on 13 April 2021.

Capitalised terms used but not defined in this announcement have the meanings given to them in the Circular.

Enquiries:

Drax Investor Relations: Mark Strafford

+44 (0) 7730 763 949

Media:

Drax External Communications: Ali Lewis

+44 (0) 7712 670 888