How Drax Are Maximising Their Subsidies

By Paul Homewood



Drax Power Station



My post on wind power costings has generated some comments about the Drax biomass operation.

Drax has four units converted to biomass. One of these, Unit 1, is covered by CfD subsidies; it has 645 MW capacity. There are three other units of the same capacity, which are still subsidised by Renewable Obligations (RO).

It has been my suspicion for a while that Drax is optimising output at the RO units, which benefit from sky high power prices on top of subsidies worth around £100/MWh. On the other hand the CfD unit only earns £126.37/MWh in total, regardless of the market price. There is nothing illegal about this of course, it is simply good business practice.

Nevertheless it is quite astonishing to see how little it has been suing its CfD unit in the last few weeks:



According to the official Low Carbon Contracts Company data, the unit has virtually produced no electricity at all in November. And output only resumed on Dec 5th. The capacity of Drax 1 is 15480 MWh per day, so even then the unit was running well below half of it capacity.

I do not know how much its ROC units have been producing. But total GB biomass has been running at around 2GW in the last month. The overwhelming majority of this is Drax, which suggests that their three ROC units have been running flat out.

I repeat, there is nothing illegal about any of this. But it does highlight how badly our renewable energy subsidy mechanisms have been designed in past years. And it is energy consumers who are paying the price.


December 18, 2022 at 03:05PM

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