Tag: investors

4 amazing uses of bioenergy

5 April 2017

Sustainable bioenergy
Large modern aircraft view of the huge engine and chassis, the light of the sun

Bioenergy is the world’s largest renewable energy source, providing 10% of the world’s primary supply. But more than just being a plentiful energy source, it can and should be a sustainable one. And because of this, it’s also a focus for innovation.

Biomass currently powers 4.8% of Great Britain’s electricity through its use at Drax Power Station and smaller power plants, but this isn’t the only way bioenergy is being used. Around the world people are looking into how it can be used in new and exciting ways.

algal blooms, green surf beach on the lakePowering self-sufficient robots 

What type of bioenergy?

Algae and microscopic animals

How’s it being used?

To power two aquatic robots with mouths, stomachs and an animal-type metabolism. Designed at the University of Bristol, the 30cm Row-Bot is modelled on the water boatman insect. The other, which is smaller, closer resembles a tadpole, and moves with the help of its tail.

Both are powered by microbial fuel cells – fuel cells that use the activity of bacteria to generate electricity – developed at the University of the West of England in Bristol. As they swim, the robots swallow water containing algae and microscopic animals, which is then used by their fuel cell ‘stomachs’ to generate electricity and recharge the robots’ batteries. Once recharged, they row or swim to a new location to look for another mouthful.

Is there a future?

It’s hoped that within five years the Row-Bot will be used to help clean up oil spills and pollutants such as harmful algal bloom. There are plans to reduce the tadpole bot to 0.1mm so that huge shoals of them can be dispatched to work together to tackle outbreaks of pollutants.

multi-coloured water ketttlesPurifying water

What’s used?

Human waste

How’s it being used?

The Omni Processor, a low cost waste treatment plant funded by the Bill and Melinda Gates Foundation, does something incredible: it turns sewage into fresh water and electricity.

It does this by heating human waste to produce water vapour, which is then condensed to form water. This water is passed through a purification system, making it safe for human consumption. Best of all, it does this while powering itself.

The solid sludge left over by the evaporated sewage is siphoned off and burnt in a steam engine to produce enough electricity to process the next batch of waste.

Is there a future?

The first Omni Processor was manufactured by Janicki Bioenergy in 2013 and has been operating in Dakar, Senegal, since May 2015. A second processor, which doubles the capacity of the first, is currently operating in Sedro-Woolley, Washington, US and is expected to be shipped to West Africa during 2017.

Closer to home and Drax Power Station, a similar project is already underway. Northumbrian Water was the first in the UK to use its sludge to produce renewable power, but unlike the Omni Processor, it uses anaerobic digestion to capture the methane and carbon dioxide released by bacteria in sludge to drive its gas turbines and generate power. Any excess gas generated is delivered back to the grid, resulting in a total saving in the utility company’s carbon footprint of around 20% and also multi-millions of pounds of savings in operating costs.

Jet plane leaves contrail in a sunset beautiful sky, copy space for textFlying across the Atlantic

What’s used?

Tobacco

How’s it being used?

Most tobacco is grown with a few factors in mind – taste and nicotine content being the most important. But two of the 80 acres of tobacco grown at Briar View Farms in Callands, Virginia, US, are used to grow tobacco of a very different sort. This tobacco can power aeroplanes.

US biofuel company Tyton BioEnergy Systems is experimenting with varieties of tobacco dropped decades ago by traditional growers because of poor flavour or low nicotine content. The low-nicotine varieties need little maintenance, are inexpensive to grow and flourish where other crops would fail.

The company is turning this tobacco into sustainable biofuel and last year filed a patent for converting oil extracted from plant biomass into jet fuel.

Is there a future?

In the hope of creating a promising source of renewable fuel, scientists are pioneering selective breeding techniques and genetic engineering to increase tobacco’s sugar and seed oil content.

In 2013, the US Department of Energy gave a $4.8m grant to the Lawrence Berkeley National Laboratory, in partnership with UC Berkeley and the University of Kentucky, to research the potential of tobacco as a biofuel.

Fukushima Japan

Powering repopulation of a disaster zone

What’s used?

Wood exposed to radiation by the Fukushima nuclear meltdowns

How’s it being used?

Last year it was announced that German energy company Entrade Energiesysteme AG, will set up biomass power generators in the Fukushima prefecture that will generate electricity using the lightly irradiated wood of the area.

It’s hoped they will help Japan’s attempts to repopulate the region following the 2011 earthquake, tsunami and nuclear accident. Entrade says its plants can reduce the mass of lightly irradiated wood waste by 99.5%, which could help Japanese authorities reduce the amount of contaminated material while at the same time generating sustainable energy.

Is there a future?

The prefecture aims to generate all its power from renewable energy by 2040 through a mix of bioenergy and solar power.

How much does it cost to charge my iPhone?

4 April 2017

Electrification

It’s difficult to imagine life without electricity. Its ubiquity means it’s easy to forget the incredible feats of science, engineering, and infrastructure that allow us to undertake a task as simple as plugging in our smartphones.

In fact, so expansive are the nationwide infrastructure networks that lie beyond the wall socket, keeping a top-of-the-range mobile phone charged for a year can cost as much as… 67p.

To work out how much electricity an appliance uses there’s a relatively straightforward equation we can follow of power (kilowatt, kW) x time (hours used) = energy transferred (kilowatt-hour, kWh). To then work out how much that costs in real terms we need to take the wattage of the appliance (worked out in kilowatts as this is the metric electricity tariffs are measured in), multiply that by the number of hours it is being used for, then multiply that figure (kWh) by your energy tariff (£).

In the case of an iPhone, it works out like this: a typical iPhone charger is 5W (0.005 kW) and a full charge from empty takes a maximum of three hours (a conservative estimate). The average electricity tariff in the UK is 15p per kWh, which leads to an equation that looks like this:

0.005 x 3 x 0.15 = £0.00225 a day

And if we assume that an iPhone owner might fully charge their phone roughly 300 times a year, the total annual sum amounts to a princely 67.5p.

There’s no other way of looking at this – it’s a very low number. But it’s important to think about this number in scale. Extrapolate it across the number of devices in the country and it grows significantly.

A 2016 study on UK smartphone owners suggests three quarters of all adults have smartphones, which would put the country total somewhere in the region of 40 million. Per day, that’s 600 MWh of electricity needed to power their smartphones. That’s the equivalent of 200 MW of power generation, or enough to power 565,000 households, for one hour.

Charger with device on wooden desk

How much electricity do my other appliances use?

Unfortunately, not all appliances are as modern, efficient and cost effective as your average smartphone. In fact, when it comes to household appliances, charging your Apple iPhone, Samsung, Sony or Windows Phone device is one of the least power-hungry activities you can undertake.

A bigger offender is your fridge-freezer, but not because they need a lot of electricity to run. Instead, it comes down to the fact it is plugged in and drawing power for a significant amount of time. A fridge freezer is plugged in for 24 hours a day, seven days a week, and even though modern fridge freezers have good energy efficiency mechanisms to limit their usage, they can very easily use 427 kWh a year, leading to an annual cost of over £50.

To put that into perspective, here’s how much your other household items cost per hour according to the same equation used earlier.

How much does it cost to charge an iphone

What’s new?

As our homes, workplaces and industries have become more energy efficient, the country as a whole is using less power. Nowhere is this more evident than in our lighting – today, the common LED lightbulb uses just 17% of the power needed for an incandescent lightbulb of equivalent brightness.

The news has been full of stories about how much more power 4K TVs use compared to high definition TVs. But because most of us buy a TV once every decade or so, replacing your 2007 1080p full HD TV with the UK’s best-selling 4K model and watching it for an hour will actually use around 70% less power.

This continued trend towards efficiency has had a marked effect on the country’s use of power. In March 2017, the government published its latest electricity demand data for the UK, showing the country’s power needs falling all the way through to 2020.

But then something interesting happens. From 2026 the forecast shows us beginning to use increasingly more power than we are due to in 2017. To the point where by 2035, we’re using more power than we are today – 19% more. Why is this?

One possibility is electric cars. In 2015, electric vehicles (EVs) consumed 0.25 TWh of power, but that’s set to grow significantly. In its Future Energy Scenarios report published in 2016, National Grid projected EVs will consume 19 TWh in 2035, but it has already said it believes its projections might be understated. In short, the EV revolution could drive demand far higher, which leads to the question, ‘Where is all of this extra power going to come from?’.

Charging an electric car

Understanding the smart home 

Our future energy needs are not just going to be met by more electricity generation capacity, they will also be assisted by something closer to home. With the introduction of smart meters, pinpointing the devices and appliances in our homes that use the most electricity will become more widespread. More than this we’ll be able to identify what time of day they’re using the most energy and when we might be able to turn them off. With this information we can optimise our usage and save money.

And while cutting down your yearly phone charging budget from 67p to 50p might not sound like much, if three quarters of the country are joining you, those pennies can quickly add up.

Annual report and accounts 2016: Smart Energy Solutions – Q&A

10 March 2017

Annual report

View the Drax Group plc annual report and accounts

Q. Do you think performance got better or worse in 2016?

A. Financially, EBITDA was in line with our guidance, although below 2015. This principally reflects very challenging commodity markets and the removal of the Climate Change Levy exemption.

We were able to partly offset the impact of these factors with a focus on flexible system support, in the prompt and balancing markets, ancillary services and improving retail profitability, all of which are important parts of our strategy to develop broader, non-commodity exposed earnings.

Operationally, 2016 was another good year across our business, but particularly
in generation where the team completed a significant outage programme and on the regulatory front the European Commission’s approval of the CfD meant we could complete the final stages of the upgrade to our third biomass unit.

Q. What were the most significant changes for the Group in 2016?

A. The most important change was the new Group strategy, which gives us all a very clear direction for the future and will see Drax become a broader business across our markets – pellet supply, generation and retail. The acquisition of Opus Energy will strengthen our retail offer, and our plans to build four rapid response gas power stations will plug the gaps at times of system stress.

The new Group strategy is underpinned by new people and IT strategies which are crucial to its successful delivery.

Haven Power has also seen significant change with the arrival of CEO Jonathan Kini. He, along with his team have been working to ensure we are well placed to continue growing and to boost our retail offer with the recent acquisition of Opus.

Q. How do you think 2017 will be different to 2016?

A. The focus will be on continuing to deliver good performance right across the Group, but there will also be changes as we work closely with the Opus team to ensure we create the best possible retail offer for the UK’s SMEs. Drax Power will be progressing the OCGT gas projects, and it will be an exciting year for Drax Biomass as they look to secure acquisitions of pellet mills and opportunities to export compressed word pellets to other markets. Everyone across the Group will see further evidence of the new strategy roll-out, particularly in the form of the people and IT strategies.

Q How does diversifying into gas fit with your aim to replace coal with renewable generation at Drax?

A. It complements it perfectly. The European Commission’s approval of the CfD enabled us to complete the upgrade of half the power station to run on compressed wood pellets in place of coal and in 2016, 65% of the electricity we generated at Drax was renewable.

The job is not yet done, and with the right conditions we will upgrade the remaining coal units. We can do this in just two to three years, when the conditions are right.

The planned gas power stations will not be run to produce baseload power, but as rapid response units to plug the gaps at times of system stress, for example when wind and solar fail to contribute what’s required. They will also be part of a solution that can accelerate the end of coal in the UK.

Q. Can you explain the acquisition of Opus? Wouldn’t it have made more sense to grow Haven?

A. We acquired Haven in 2009 when it was an SME focused business. Since then the business has grown significantly by principally focusing on the I&C market to provide a route to market for around half the electricity Drax Power produces, although it retains a relatively small SME presence.

Opus – like Haven – is a challenger business and brings with it 265,000 customer metered sites, largely SMEs. Opus also supplies gas, which for the first time will see us having the ability to provide a dual fuel offer, something that is vital for many SMEs.

Opus gives us immediate scale in the SME market and we think the complementary nature of the Haven and Opus models can provide a compelling challenger retail proposition for our customers.

Q. Have you got the right team and systems in place to ensure that Opus will join the group with minimal disruption?

A. Yes, Jonathan Kini, who leads our retail business has a great depth of experience in SME markets and integration. He has strengthened his team to ensure we have the expertise required to make this a very successful transition as Opus becomes a member of the Drax family.

However, I’m in no way complacent about the challenges, that’s why we developed a plan to embed Opus covering everything from IT to communications. It’s vital we get this right and that our new colleagues become part of delivering our new Group strategy and share in our values. Clearly I also want both Haven and Opus customers to continue experiencing high levels of service along with the benefits of a more comprehensive retail offer.

Q. How is Drax Power different to when you joined?

A. In many ways Drax is now a very different place to what it was when I joined Drax more than ten years ago. The fact that in 2016 65% of our output was renewable is something I’m very proud of, and right across the power station you can actually see the difference that using compressed wood pellets has made: huge storage domes, specially designed train wagons, and a visitor centre and guides explaining the latest chapter in the Drax story.

Essentially today the power station operates as two power stations: a reliable, flexible, renewable generator producing electricity for businesses and homes and a fossil fuel generator providing system support and security of supply.

Q. You have highlighted the role that Drax coal units can play in system support and ancillary services – what is this and why is it important?

A. Increasing levels of intermittent renewables and inflexible nuclear present the grid with a challenge, and for Drax, opportunities.

When the grid needs capacity our coal units have the flexibility to turn on and off, and ramp up and down responding to demand as weather and time of day determine the availability of wind and solar. It is already common place for Drax to “two-shift” the coal units; using them to provide flexible, responsive power, rather than baseload.

But it’s not just about generation – a well-functioning grid needs other services too. 2017 will see Drax seeking further opportunities to provide the electricity grid with this increasingly important system support.

Q. Did the result of the UK’s EU referendum have any impact on the business?

A. Our business model is largely unaffected by the decision to leave the EU. We will continue to generate and sell power in the UK. We purchase a significant amount of the fuel we require in foreign currency and our long-term hedging strategy – five years ahead – has protected us against any negative impacts of exchange rate fluctuations for the medium-term.

Q. Has the change in the UK Government resulted in any different signals being sent out to the renewables sector?

A. I think that still remains to be seen. We have to look at the huge changes that have happened in Government since the EU referendum as a potential opportunity for us as we continue to make the case for investment in further biomass upgrades.

What is clear is that the focus is still very much on affordable energy. In 2016, Imperial College London and the economic consultancy NERA published new research that we commissioned. It showed that when whole system costs are factored in biomass is the cheapest large scale renewable technology. If Government applied this method of support to future CfD auctions, consumers could benefit by up to £2.2 billion.

As we take forward our new strategy we will also be clearly communicating our plans for rapid response gas power stations and how the system support they will provide contributes to decarbonising the UK’s energy system.

 

Q. What are the latest plans to convert the remaining generating units that run on coal?

A. We have now delivered on our original strategy to upgrade three generating units to run on compressed wood pellets. However, we would like to do more, and have consistently said that with the right conditions we stand ready to convert further units.

The transformation we’ve been through has meant we’ve learnt a huge amount over the last few years, and there’s no doubt that for future upgrades we can carry them out quicker and more cost-effectively.

Q. Why do you think questions around the sustainability of biomass continue to be raised?

A. I think many companies involved in the sourcing and supply of sustainable products will face questions in this area. What we will do is continue to be open and honest about all aspects of how our business operates including sustainability. Much of that evidence can be seen in this annual report, from our own stringent sustainability policy, to how we comply with the UK Government’s sustainability legislation criteria.

However, we are never complacent and for example each new pellet supplier to Drax is fully and independently audited before a contract is signed and our existing suppliers are audited at least once every three years.

Q. Which other business roles do you have outside of Drax and how do they help the Group

A. I’m a non-executive director at the Eaton Corporation and also the Court of the Bank of England. I think it’s important to have roles outside the business, as long as they allow you to get the balance right and these do. So, clearly they should in no way be a distraction from the “day job”, but worth an investment of time that allows you to see how others operate and whether there are lessons that we can learn or best practice that we can adopt.

Q. What’s the feeling around the Board table?

A. I’d say it’s one of excitement at the opportunities our new Group strategy and acquisitions present for the future. While there’s obviously satisfaction that we’ve delivered on what we initially set out to do – upgrade three generating units to run on compressed wood pellets, there is certainly no feeling of “job done”.

In the months ahead the Board will rightly want to see clear and positive progress as we work to boost our retail offer through Opus Energy and develop our plans to build four rapid response gas power stations.

View the Drax Group plc annual report and accounts

Mailing of Annual Report to Shareholders

Annual report
RNS Number : 1940Z
DRAX GROUP PLC
(Symbol: DRX)

Mailing of the Annual report and accounts 2016 and ancillary documents to shareholders

The following documents are being mailed to the registered shareholders of Drax Group plc today, Friday 10 March 2017:

  • Annual report and accounts 2016;
  • Notice of the 2017 Annual General Meeting; and
  • Form of Proxy for the 2017 Annual General Meeting.

In accordance with Listing Rule 9.6.1 a copy of each of these documents has been submitted to the National Storage Mechanism and will be available for viewing shortly.

The Annual report and accounts 2016 and the Notice of the 2017 Annual General Meeting will also available from 10 March 2017 as follows:

  • for viewing on the Company’s website, www.drax.com/uk; and/or
  • by writing to the Company Secretary at the Registered Office; Drax Power Station, Selby, North Yorkshire YO8 8PH.

Annual General Meeting

The Company is to hold its Annual General Meeting at 11.30am on Thursday 13 April 2017, at The Grand Hotel & Spa, Station Rise, York YO1 6GD.

Key dates relating to the final dividend

Detailed below are the key dates regarding the final dividend:

  • 20 April 2017 – ordinary shares marked ex-dividend.
  • 21 April 2017 – record date for entitlement to the dividend.
  • 12 May 2017 – payment date for the dividend.

The rate of the final dividend is 0.4 pence per share.

  

David McCallum

Company Secretary

10 March 2017

The Annual report and accounts can be downloaded here: https://www.drax.com/uk/investors/results-and-reports/#annual-report-and-accounts 

The biomass carbon story

Matthew Rivers, Director of Corporate Affairs, Drax, Group Special Advisor

23 February 2017

Sustainable bioenergy

There is an important difference between carbon dioxide (CO2) emitted from coal (and other fossil fuels) and CO2 emitted from renewable sources. Both do emit CO2 when burnt, but in climate change terms the impact of that CO2 is very different.

To understand this difference, it helps to think small and scale up. It helps to think of your own back garden.

One tree, every year for 30 years

Imagine you are lucky enough to have a garden with space for 30 trees. Three decades ago you decided to plant one tree per year, every year. In this example, each tree grows to maturity over thirty years so today you find yourself with a thriving copse with 30 trees at different stages of growth, ranging from one year to 30 years old.

At 30 years of age, the oldest has now reached maturity and you cut it down – in the spring, of course, before the sap rises – and leave the logs to dry over the summer. You plant a new seedling in its place. Through the summer and autumn the 29 established trees and the new seedling you planted continue to grow, absorbing carbon from the atmosphere to do so.

Winter comes and when it turns cold and dark you burn the seasoned wood to keep warm. Burning it will indeed emit carbon to the atmosphere. However, by end of the winter, the other 29 trees, plus the sapling you planted, will be at exactly the same stage of growth as the previous spring; contain the same amount of wood and hence the same amount of carbon.

As long as you fell and replant one tree every year on a 30-year cycle the atmosphere will see no extra CO2 and you’ll have used the energy captured by their growth to warm your home. Harvesting only what is grown is the essence of sustainable forest management.

If you didn’t have your seasoned, self-supplied wood to burn you might have been forced to burn coal or use more gas to heat your home. Over the course of the same winter these fuels would have emitted carbon to the atmosphere which endlessly accumulates – causing climate change.

Not only does your tree husbandry provide you with an endlessly renewable supply of fuel but you also might enjoy other benefits such as the shelter your trees provide and the diversity of wildlife they attract.

Mushroom - Brown cap boletus in autumn

No added carbon

This is a simplified example, but the principles hold true whether your forest contains 30 trees or 300 million – the important point is that with these renewable carbon emissions, provided you take out less wood than is growing and you at least replace the trees you take out, you do not add new carbon to the atmosphere. That is not true with fossil fuels.

It is true that you could have chosen not to have trees. You could instead build a wind turbine or install solar panels on your land. That would be a perfectly reasonable choice but you’ll still need to use the coal at night when the sun doesn’t shine or when the wind isn’t blowing. Worst of all you don’t get all the other benefits of a thriving forest – its seasonal beauty and the habitat that’s maintained for wildlife.

Of course, the wood Drax needs doesn’t grow in our ‘garden’. We bring it many miles from areas where there are large sustainably managed forests and we carefully account for the carbon emissions in the harvesting, processing and transporting the fuel to Drax. That’s why we ‘only’ achieve more than 80% carbon savings compared to coal.

Preliminary results for the 12 months ended 31 December 2016

16 February 2017

Investors
RNS Number : 0194X
Drax Group PLC
(Symbol: DRX)

Twelve months ended 31 December

2016

2015

Key financial performance measures

EBITDA (£ million)

140

169

Underlying earnings (£ million)

21

46

Underlying earnings per share (pence)

5.0

11.3

Total dividends (pence per share)

2.5

5.7

Net debt (£ million)

93

187

Statutory accounting measures

Profit before tax (£ million)

197

59

Reported basic earnings per share (pence)

48

14

Financial and Operational Highlights

  • 2016 EBITDA in line with guidance
    • Year on year reduction driven by challenging commodity markets and loss of LECs
    • Mitigated by growth in system support, improving retail and pellet supply profitability
  • Three converted biomass units, CfD approved in December
    • 65% of generation from biomass in 2016 (2015: 43%)
    • Investment completed on budget
  • Statutory profit before tax includes unrealised gains related to foreign currency hedging
  • Strong cash flows and balance sheet

Strategic Highlights and Outlook

  • Acquisition of Opus Energy and open cycle gas turbine projects
  • Focus on delivery of strategy
    • Higher quality diversified earnings and targeted long-term growth opportunities
    • Significant earnings growth
  • Maintain operational excellence across base business
  • Refinancing of existing debt facilities
  • 2017 EBITDA expectations in line with consensus

Dorothy Thompson, Chief Executive of Drax Group plc, said:

“We are playing a vital role in helping change the way energy is generated, supplied and used as the UKmoves to a low carbon future.

“With the right conditions, we can do even more, converting further units to run on compressed wood pellets. This is the fastest and most reliable way to support the UK’s decarbonisation targets, whilst minimising the cost to households and businesses.

“In a challenging commodity environment Drax has delivered a good operational performance with 65% renewable power generation.

“The acquisition of Opus Energy and rapid response open cycle gas turbine projects are an important step in delivering our strategy, diversifying our earnings base and contributing to stronger, long-term financial performance across the markets in which we operate.”

NOTES FOR ANALYSTS AND EDITORS

See: https://otp.tools.investis.com/clients/uk/drax1/rns/regulatory-story.aspx?cid=1607&newsid=844424

Chief Executive comments on full year results

Dorothy Thompson, (2005-2017 Chief Executive, Drax Group)

Investors

We are playing a vital role in helping change the way energy is generated, supplied and used as the UK moves to a low carbon future.

With the right conditions, we can do even more, converting further units to run on compressed wood pellets. This is the fastest and most reliable way to support the UK’s decarbonisation targets, whilst minimising the cost to households and businesses.

In a challenging commodity environment Drax has delivered a good operational performance with 65% renewable power generation.

 

The acquisition of Opus Energy and rapid response open cycle gas turbine projects are an important step in delivering our strategy, diversifying our earnings base and contributing to stronger, long-term financial performance across the markets in which we operate.

Related documents:

Completion of the acquisition of Opus Energy Group Limited

10 February 2017

Investors
RNS Number : 6124W
Drax Group PLC
(Symbol: DRX) 

Drax Group plc (“Drax”) is pleased to announce that it has today completed the acquisition of the entire issued share capital of Opus Energy Group Limited (the “Acquisition”).

The Acquisition was originally announced on 6 December 2016.

Dorothy Thompson, Chief Executive, Drax Group, said:

 “Today we took another step forward in delivering our Group-wide strategy.  This addition to our existing retail offer will see our challenger brands, Opus Energy and Haven Power, working to provide the UK’s businesses with affordable, reliable and renewable energy.”

Enquiries:

Drax Investor Relations 

+44 (0) 1757 612 491

Mark Strafford

J.P. Morgan Cazenove (acting as exclusive financial adviser to Drax in connection with the proposed acquisition of Opus Energy and as Drax’s corporate broker):

+44 (0) 207 742 6000

Robert Constant

Carsten Woehrn

Wendy Hohmann

Drax Media

+44 (0) 1757 612 026

 Paul Hodgson

Website: www.drax.com/uk

Note:

(1)   J.P. Morgan Limited (which conducts its UK investment banking activities as J.P. Morgan Cazenove), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Drax and for no one else in connection with the Acquisition and will not regard any other person (whether or not a recipient of this document) as a client in relation to the Acquisition and will not be responsible to anyone other than Drax for providing the protections afforded to customers of J.P. Morgan Cazenove or for affording advice in relation to the Acquisition, the contents of this document or any transaction, arrangement or other matter referred to in this document.

END

European Commission Approves CfD Contract

19 December 2016

Investors
Drax biomass storage domes
RNS Number : 2424S
Drax Group PLC
(Symbol:DRX)

Drax confirms that the European Commission (EC) has today approved the CfD Investment Contract(1), awarded to Drax by the UK Government, for its third biomass unit conversion.

https://europa.eu/rapid/press-release_IP-16-4462_en.htm

The strike price remains £100/MWh(2) and there are no changes to the terms of the contract.

The unit will commence operating as a fully converted biomass unit under this contract in the coming days, having previously operated as a co-firing unit under the Renewables Obligation.

Approval of this contract was a condition of the proposed acquisition of Opus Energy and today’s announcement represents a positive step towards the completion of this process.

Dorothy Thompson, Chief Executive Officer of Drax Group, said:

“We are pleased the European Commission has completed its review of the contract and approved it in line with our expectations. We now look forward to fully converting the unit to run on sustainable biomass.

“Drax is already playing a vital role in helping change the way energy is generated, supplied and used as the UK moves to a low carbon future.

“With the right conditions, we can do even more, converting further units at Drax to use sustainable biomass in place of coal and through rapid response gas projects to plug the gaps created by intermittent renewables.

“Our plans for greater diversification will deliver a package of reliable, affordable electricity to the UK’s households and businesses.”

Enquiries:

Drax Investor Relations: Mark Strafford

+44 (0) 1757 612 491

Media:

Drax External Communications: Paul Hodgson

+44 (0) 1757 612 026

Website: www.drax.com/uk

 

Notes:

(1)   The Government introduced Contracts for Difference (CfDs), which are long-term contracts, to support the development of low carbon electricity generation. To avoid an investment hiatus in the renewables sector before CfDs become available under the enduring regime, the Government introduced a scheme for Investment Contracts under the Final Investment Decision Enabling (“FID Enabling”) for Renewables mechanism. These were ‘early’ CfDs intended to provide greater confidence for investors in advance of the enduring CfD.

(2)   Price in 2012 terms.

END