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Building a sustainable business

Will Gardiner, Chief Executive Officer, Drax Group

21 March 2018

Opinion

The UK energy sector is changing rapidly. The boundaries between users, suppliers and generators are blurring as energy users are choosing to generate their own energy and are managing their energy use more proactively while, conversely, generators are increasingly seeing users as potential sources of generation and providers of demand management.

“The UK is undergoing an unprecedented energy revolution with electricity at its heart – a transition to a low-carbon society requiring new energy solutions for power generation, heating, transport and the wider economy”

In that context, our Group’s purpose is to help change the way energy is generated, supplied and used for a better future. This means that sustainability, in its broadest sense, must be at the very core of what we do. Successful delivery of our purpose depends on all our people, across all our businesses, doing the right thing, every day. With the right products and services, we can go even further and help our customers make the right, sustainable energy choices.

As our businesses transform and we embrace a larger customer base, different generation technologies and operate internationally, the range of sustainability issues we face is widening and becoming more complex. At the same time, the range of stakeholders looking to Drax for responsible leadership on sustainability is increasing. The need for transparency is greater than ever, so our website’s sustainability section provides a comprehensive insight into the Group’s environmental, social and governance management and performance during 2017.

Some of the highlights include:

  • Carbon reduction: I am pleased that, in 2017, the proportion of our energy generation from renewable sources remained high. 65% of our generation during the year came from sustainable biomass and accounted for 15% of the country’s overall renewable generation. We maintained our rigorous and robust approach to ensure that we only ever use biomass that is sustainably produced and legally sourced.
  • People: Another key achievement was the roll out of our people strategy to 2020 – One Drax – which focuses on talent to deliver on our strategic and operational objectives.
  • Safety: The health and safety of all our employees and contractors is of paramount importance to Drax. While the Group’s safety incident rate remained on target in 2017, the fire at our biomass rail unloading facilities in December did cause an outage, with disruption lasting into 2018. It highlighted once again that the risks of generating using biomass must be mitigated through robust safety procedures and a risk-based plant investment and maintenance programme. Safety therefore remains at the centre of our operational philosophy and we are determined to do even better.
  • Customers: Our business to business (B2B) Energy Supply business received recognition for their dedication to customer service. Opus Energy won “Utilities Provider of the Year” at the British Small Business Awards 2017.

We initiated a process which would allow us to participate in the United Nations Global Compact (UNGC). We are committed to the initiative and its ten principles, which align with our culture of doing the right thing.

Our website’s sustainability section also sets out our commitment to achieving the United Nations’ Sustainable Development Goals through our operations, the services we deliver to our customers and in partnership with others.

Global ambitions and goals are important, but so too are our ambitions for our local and regional communities. As such, we have played a key role in the UK Northern Powerhouse Partnership, initiatives such as POWERful Women and a comprehensive programme of stakeholder engagement.

“Sustainability, in its broadest sense, must be at the very core of what we do”

Finally, I do not believe any organisation, however well intentioned, can get its commitment to sustainability perfect on its own and I am very keen for Drax to learn from people reading our website’s sustainability section. It sets out what we see as our achievements and aspects in which we believe we need to do better. I would like to invite any stakeholder with an interest to comment on what we’re doing and help us improve where we can. Feedback can be submitted at Contact us or via our Twitter account or Facebook page.

Read the Chief Executive’s Review in the Drax Group plc annual report and accounts

The sustainable development goals

Sustainable business

In 2015, the United Nations launched 17 Sustainable Development Goals (SDGs) to end poverty, protect the planet and ensure prosperity for all by 2030. At Drax, improved performance has guided our business purpose for over four decades. We are committed to play our part in achieving the UN SDGs through our operations, the services we deliver to our customers and in partnership with others.

Drax Group has the most significant impact on the Global Goals listed below:

Affordable and clean energy

We provide 6% of the UK’s electricity and play a vital role in helping change the way energy is generated, supplied and used as the UK moves to a low-carbon future. In 2017, 65% of the electricity we produced came from biomass, rather than coal. Our B2B Energy Supply businesses encourage customers to be more sustainable, including through the provision of reliable, renewable electricity at no premium compared to fossil fuel-generated electricity.

Customers

Low Carbon

Decent work and economic growth

We directly employ over 2,500 people in the United Kingdom and United States and their health, safety and wellbeing remains our highest priority. Our B2B Energy Supply business offers energy solutions and value-added services to industrial, corporate and small business customers across the UK.

Society

Industry, innovation and infrastructure

We develop innovative energy solutions to enable the flexible generation and lower-carbon energy supply needed for a low-carbon future. We also innovate to improve the efficiency of our operations and increase our production capacity, notably in our biomass supply chain. Our B2B Energy Supply business offers “intelligent sustainability” and innovative products and services to our customers.

Customers

Low Carbon

Climate action

Our electricity generation activities are a source of carbon emissions. We are committed to helping a low-carbon future by moving away from coal and towards renewable and cleaner fuels, including biomass electricity generation and our planned rapid-response gas plants. We also help our business customers to be more sustainable through the supply of renewable electricity.

Low Carbon

Life on land

We source sustainable biomass for our electricity generation activities and engage proactively with our supply chain to ensure that the forests we source from are responsibly managed. We work closely with our suppliers and through tough screening and audits ensure that we never cause deforestation, forest decline or source from areas officially protected from forestry activities or where endangered species may be harmed.

Low Carbon

Sourcing

Environment

Partnerships for the goals

We engage with stakeholders regularly and build relationships with partners to raise our standards and maximise what can be achieved. Our collaborations align closely with our business, purpose and strategy.

Stakeholder Engagement

Society

Commitment to the UNGC

Sustainable business

In 2017, we initiated a process which will allow us to participate in the United Nations Global Compact (UNGC) a global sustainability initiative and we will evidence progress next year. We made progress in preparing for participation outlined in the following sections:

Human rights

We seek to safeguard fundamental human rights for our employees, contractors and anyone that is affected by our business. We ensure that our suppliers apply high standards to protect human rights.

Modern Slavery Statement

Labour

We have policies and standards in place to safeguard our employees and contractors. We respect our employees’ rights in areas such as freedom of association and collective bargaining and we do not tolerate forced, compulsory or child labour. We are committed to providing a safe and healthy workplace for all our people and we strive to prevent discrimination and promote diversity in our workforce.

People

Environment

As a generator and supplier of electricity, we take our responsibility to protect the environment very seriously. We have transformed our generation business and are seeking to further reduce our environmental impact. We focus on reducing our emissions to air, discharges to water, disposal of waste, and on protecting biodiversity and using natural resources responsibly. We have invested heavily in lower-carbon technology as we continue to transition away from coal to renewable and lower-carbon fuels.

Customers

Low Carbon

Environment

Anti-corruption

We do not tolerate any forms of bribery, corruption or improper business conduct. Our “Doing the Right Thing” framework sets out the ethical principles our people must uphold, which is supported by the Group corporate crime policy. Our strict ethical business principles apply to all employees and contractors and we expect the same high standards from anyone we do business with.

Ethics and Integrity

This is how you unload a wood chip truck

30 June 2017

Sustainable bioenergy
Truck raising and lowering

A truck arrives at an industrial facility deep in the expanding forestland of the south-eastern USA. It passes through a set of gates, over a massive scale, then onto a metal platform.

The driver steps out and pushes a button on a nearby console. Slowly, the platform beneath the truck tilts and rises. As it does, the truck’s cargo empties into a large container behind it. Two minutes later it’s empty.

This is how you unload a wood fuel truck at Drax Biomass’ compressed wood pellet plants in Louisiana and Mississippi.

What is a tipper?

“Some people call them truck dumpers, but it depends on who you talk to,” says Jim Stemple, Senior Director of Procurement at Drax Biomass. “We just call it the tipper.” Regardless of what it’s called, what the tipper does is easy to explain: it lifts trucks and uses the power of gravity to empty them quickly and efficiently.

The sight of a truck being lifted into the air might be a rare one across the Atlantic, however at industrial facilities in the United States it’s more common. “Tippers are used to unload trucks carrying cargo such as corn, grain, and gravel,” Stemple explains. “Basically anything that can be unloaded just by tipping.”

Both of Drax Biomass’ two operational pellet facilities (a third is currently idle while being upgraded) use tippers to unload the daily deliveries of bark – known in the forestry industry as hog fuel, which is used to heat the plants’ wood chip dryers – sawdust and raw wood chips, which are used to make the compressed wood pellets.

close-up of truck raising and lowering

How does it work?

The tipper uses hydraulic pistons to lift the truck platform at one end while the truck itself rests against a reinforced barrier at the other. To ensure safety, each vehicle must be reinforced at the very end (where the load is emptying from) so they can hold the weight of the truck above it as it tips.

Each tipper can lift up to 60 tonnes and can accommodate vehicles over 50 feet long. Once tipped far enough (each platform tips to a roughly 60-degree angle), the renewable fuel begins to unload and a diverter guides it to one of two places depending on what it will be used for.

“One way takes it to the chip and sawdust piles – which then goes through the pelleting process of the hammer mills, the dryer and the pellet mill,” says Stemple. “The other way takes it to the fuel pile, which goes to the furnace.”

The furnace heats the dryer which ensures wood chips have a moisture level between 11.5% and 12% before they go through the pelleting process.

“If everything goes right you can tip four to five trucks an hour,” says Stemple. From full and tipping to empty and exiting takes only a few minutes before the trucks are on the road to pick up another load.

Efficiency benefits

Using the power of gravity to unload a truck might seem a rudimentary approach, but it’s also an efficient one. Firstly, there’s the speed it allows. Multiple trucks can arrive and unload every hour. And because cargo is delivered straight into the system, there’s no time lost between unloading the wood from truck to container to system.

Secondly, for the truck owners, the benefits are they don’t need to carry out costly hydraulic maintenance on their trucks. Instead, it’s just the tipper – one piece of equipment – which is maintained to keep operations on track.

However, there is one thing drivers need to be wary of: what they leave in their driver cabins. Open coffee cups, food containers – anything not firmly secured – all quickly become potential hazards once the tipper comes into play.

“I guess leaving something like that in the cab only happens once,” Stemple says. “The first time a trucker has to clean out a mess from his cab is probably the last time.”

3 ways decarbonisation could change the world

27 June 2017

Sustainable business

Mitigating climate change is a difficult challenge. But it’s one well within the grasp of governments, companies and individuals around the world if we can start thinking strategically.

On the behalf of the German government, The Internal Energy Agency (IEA) and the International Renewable Energy Agency (IRENA) have jointly published a report outlining the long-term targets of a worldwide decarbonisation process, and how those targets can be achieved through long-term investment and policy strategies.

At the heart of the report is a commitment to the ‘66% two degrees Celsius scenario’, which the report defines as, ‘limiting the rise in global mean temperature to two degrees Celsius by 2100 with a probability of 66%’. This is in line with the Paris Agreement, which agreed on limiting global average temperature increase to below two degrees Celsius.

Here are three of the findings from the report that highlight how decarbonisation could change the world.

The energy landscape will change – and that’s a good thing

Decarbonisation will by definition mean reducing the use of carbon-intensive fossil fuels. Today, 81% of the world’s power is generated by fossil fuels. But by 2050, that will need to come down to 39% to meet the 66% two degrees Celsius scenario, according to the report. But, this doesn’t mean all fossil fuels will be treated equally.

Coal will be the most extensively reduced, while other fossil fuels will be less affected. Oil use in 2050 is expected to stand at 45% of today’s levels, but will likely still feature in the energy landscape due its use in industries like petrochemicals.

Gas will likely also remain a key part of the energy makeup, thanks to its ability to provide auxiliary grid functions like frequency response and black-starting in the event of grid failure.

Renewables like biomass will likely play an increasing role here as well, particularly when combined with carbon capture and storage (CCS) technology.

Overall, renewable energy sources will need to increase substantially. In the report’s global roadmap for the future, renewables make up two thirds of the primary energy supply. Reaching this figure will be no mean feat – it will mean renewable growth rates doubling compared with today.

Everyday electricity use will become more efficient 

The report highlights the need for ‘end-use’ behaviour to change. This can mean everyday energy users choosing to use a bit less heat, power and fuel for transport in our day-to-day activities, but a bigger driver of change will be by investment in better, more efficient end-use technology – the technology, devices and household appliances we use every day.

In fact, the study argues that net investment in energy supply doesn’t need to increase beyond today’s level – what needs to increase is investment in these technologies. For instance, by 2050, 70% of new cars must be electric cars to meet decarbonisation targets.

Infrastructure design could also be improved for energy efficiency – smart grids, battery storage and buildings retrofitted with energy efficient features such as LED lighting will be essential. There’s also the possibility of increased use of cleaner building materials and processes – for example, constructing large scale buildings out of wood rather than carbon-intensive materials such as concrete and steel.

Decarbonisation will cost, but not decarbonising will cost more

The upfront costs of meeting temperature targets will be substantial. A case study used in the report estimates that $119 trillion would need to be spent on low-carbon technologies between 2015 and 2050. But it also suggests another $29 trillion may be needed to meet targets.

However, failure to act could mean the world will pay out an even higher figure in healthcare costs, or in other economic costs associated with climate change, such as flood damage or drought. Therefore, the sum for decarbonisation could end up costing between two and six times less than what failing to decarbonise could cost.

On top of this, the new jobs (including those in renewable fuel industries that will replace those lost in fossil fuels) and opportunities that will be created between 2015 and 2050 could add $19 trillion to the global economy. More than that, global GDP could be increased by 0.8% in 2050, thanks to added stimulus from the low carbon economy.

Achieving a cleaner future won’t be easy – it requires planning, effort, and the will to see beyond short-term goals and think about the long-term benefits. But as the report demonstrates, get it right and the results could be considerable.

How sustainable biomass crosses the Atlantic to power the nation

21 June 2017

Sustainable bioenergy

In the UK, we’re so accustomed to using electricity we rarely think of the journey it takes from power station to plug.

In fact, electricity must travel across a network of cables, wires and substations before it makes it from the power stations generating it to the homes and businesses using it. At Drax Power Station, which supplies 16% of Great Britain’s renewable power, there’s another journey that takes place even before the electricity leaves the power station.

This journey – the journey of more than half of the compressed wood pellet fuel Drax uses to generate electricity – has its origins in the expanse of forestland in the southern USA.

From forest to fuel

The journey starts in the huge, working forests of the southern states of the USA where low value wood – such as the thinnings cleared as part of a forests’ growing cycle – is collected in a responsible and sustainable way to make high density wood pellets, which Drax Power Station uses to produce more than 60% of its electricity.

Drax Group’s own pellet manufacturer, Drax Biomass, produces around 15% of the power station’s renewable fuel. After pelletisation locally at its Amite and Morehouse facilities, located in Louisiana and Mississippi respectively, the biomass is transported to Drax Transit at the Port of Greater Baton Rouge, on the Mississippi River. From Morehouse, trains made up of closed-top grain cars, each capable of carrying 120 tonnes, transport the pellets 221 miles to Baton Rouge. At Amite, just 60 miles from Baton Rouge, fuel-efficient trucks carry 25-tonne loads between plant and port.

Once at the port, the truck and train cargoes are unloaded into one of two biomass storage domes – each holding 40,000 tonnes of biomass – before being loaded into the ships for their transatlantic journey.

A boat arrives at Peel Ports in Liverpool

From port to port

Drax uses a range of ships to carry the pellets on their 8,000-mile journey to the UK, ranging from big ‘Coastal’ ships, capable of hauling 20,000 tonnes, to truly massive Panamax ships, more than a quarter of a kilometre in length and capable of carrying up to 80,000 tonnes.

The ships leave the port and spend 24 hours travelling the 200 miles down the Mississippi River into the Gulf of Mexico, around Florida, and into the Atlantic. From here, it’s a 19-day voyage to reach ports in the UK. To put that into perspective, it took Columbus more than two months to make his first trip across the Atlantic.

The ships pull into ports in Tyne, Hull, Immingham and Liverpool, where they are unloaded. At the bespoke biomass port facility at Peel Ports in Liverpool an Archimedean screw removes the pellets from the ship’s holds and transports them onto a conveyer belt, which loads them onto trains. These four ports can process up to 12 million tonnes of biomass every year, combined.

From port to power station

Like the stateside journey, Drax uses trains to carry its cargo from port to power plant. The difference on the UK side, however, is that the UK trains were designed specifically to carry biomass wood pellets. Clever design and engineering was used to maximise the space inside each carriage and ensure the trains carry large loads despite UK rail restrictions.

These trains carry the pellets across the country (and even over the Pennines for trains coming from Liverpool) to Drax Power Station in Selby, North Yorkshire. Roughly 14 trains arrive at the plant every day and collectively unload about 20,000 tonnes of pellets every day, from Monday to Saturday. A system of conveyor belts carry these pellets to one of Drax’s four giant biomass storage domes, each capable of housing about 80,000 tonnes of pellets.

Then, when needed, the conveyor system takes the pellets on their final journey: into the furnace. The pellets are combusted, which boils water to create steam, which turns a turbine connected to a generator, which then feeds electricity to the national grid. The electricity travels across miles of cables, and wires, through substations and transformers, and finally into your power socket.

An engineer looking into a Drax furnace

Long journey, low emissions

Despite the number of miles travelled, the journey of biomass is tracked and managed to ensure the Drax Power Station supply chain is as low-carbon as possible. The result is that, even with all supply chain emissions considered, the power generated has a carbon emissions profile that is more than 80% lower than coal.

It might be one of the most impressive supply chains involved in powering this island – but it’s not the only one to travel thousands of miles. The journey of biomass to England joins liquefied natural gas (LNG) shipped from the Middle East, coal from Colombia and solar panels manufactured in China – imports that ensure we have readily available access to power on our shores.

Completion of Acquisition of Louisiana Pellets

26 April 2017

Investors
RNS Number : 3839D
Drax Group PLC
(Symbol: DRX)

Following a court hearing to approve the result of an auction on 30 March 2017, Drax has now completed the acquisition of substantially all of the assets of Louisiana Pellets(1). The acquisition price was $35.4m.

Louisiana Pellets will provide additional biomass pellet capacity in the region of 450k tonnes pa, playing an important part in Drax’s strategy to build a flexible supply chain capable of self-supplying 30% of its generation requirement.

The plant is expected to return to service by early 2018 following incremental investment to upgrade and optimise the facility.

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

“Louisiana Pellets marks another positive step in delivering the Drax Group strategy.

“The deal forms part of our plan to significantly increase our capability to manufacture high quality compressed wood pellets and increase self-supply to Drax Power Station.

“Upgrading half the Power Station to use sustainable wood pellets has resulted in Drax producing 16% of the UK’s renewable electricity and with the right conditions we aim to do more.”

Enquiries:

Drax Investor Relations:

Mark Strafford

+44 (0) 7730 763 949

Media:

Drax External Communications:

Paul Hodgson

+44 (0) 1757 612026

Ali Lewis

+44 (0) 1757 612165

Website: www.drax.com/us

Notes:

(1)   Louisiana Pellets is the owner and developer of a wood biomass pellet manufacturing facility located in Urania, Louisiana.

END

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.