Two 300-MW UK biomass plants approved

Aug. 15, 2011, London, UK – UK generator
Drax has welcomed government approval for two 300-MW biomass plants, but says
the projects will progress only if a sufficient subsidy for dedicated plants is
announced. The Department of Energy and Climate Change (DECC) provided Section
36 approval for the Heron Renewable Energy plant in Immingham, Lincolnshire,
and the Ouse Renewable Energy plant proposed at the site of Drax's current
coal-fired power station in Selby, North Yorkshire.

Drax is one of many UK biomass firms
awaiting the outcome of DECC's renewable obligation certificates (ROCs) banding
review, which was expected to be announced in July 2011. The review will
determine how many ROCs energy companies will receive for electricity produced
from renewable sources. It is expected to be finalized later this year before
coming into force from April 1, 2013.

Despite reports that the proposed banding
consultation may not be announced until the end of 2011, DECC continues to say
that the review is progressing and will be published shortly.

The consensus among many proposed dedicated
biomass developers is that the level of ROCs needs to be increased to 1.75/MWh
from 1.5/MWh to make the developments financially feasible.

Drax is already the UK's largest renewable
energy producer, with its co-fired operations accounting for around 6% of the
country's total renewable output. The company burned 600,000 tonnes of biomass
in the first six months of 2011, which equated to 8% of its fuel mix, compared
with 300,000 tonnes in January to June 2010, which accounted for 5% of the
company's fuel mix.

Despite the increase in biomass
consumption, Drax did not use the plant's full co-firing capacity of 12%
because of continued low regulatory support, the company says. Drax has further
plans to convert all of its coal capacity in Selby to biomass and build a third
300-MW dedicated plant, but any decision will be based on financial support
from government.

Drax burned 907,000 tonnes of biomass in
2010, more than double the 2009 year-end results of 400,000 tonnes.

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