Drax announces three biomass power stations

The owner of Europe’s biggest coal-fired power station announced plans today to develop three biomass-fired generation plants at a cost of £2bn (€2.53bn).

Drax, which produces 7% of the UK’s electricity at its Selby plant in North Yorkshire, said the development will be taken forward in conjunction with engineering giant Siemens.

The firm said it had secured rights to port sites at Immingham and Hull for two of the proposed plants, while a number of options were being considered for the third site, including land at Drax power station.

Construction of the first plant is set to start in late 2010 and the site will become operational in 2014.

Drax said the new plants would make a “significant” contribution to the UK’s renewable energy target as well as supporting security of supply.

The three plants will supply 15% of the UK’s renewable power and up to 10% of total UK electricity, said Drax.

Dorothy Thompson, chief executive of Drax, said: “This is an exciting opportunity for Drax to develop its business and to deliver shareholder value by exploiting our core competencies, whilst achieving fuel diversification and carbon abatement.

“We are strongly of the view that investment in the generation sector will provide attractive returns. We believe our venture into dedicated biomass-fired generation underpins our commitment to reducing the carbon footprint of electricity generation from the continued, but necessary, reliance on fossil fuels, whilst delivering secure and reliable supplies of electricity.”

Wolfgang Bischoff, managing director of Siemens Project Ventures, said: “We are pleased to be furthering our long-standing relationship with Drax and particularly pleased to be their partner in this new venture.

“We believe that the development of dedicated biomass plant will make a significant contribution to the renewable energy needs of the UK going forward and importantly help to address the challenge of climate change facing the sector. As a leading technology company, we are used to providing solutions to such important issues.”

Drax added that since publishing its half-yearly results in August, which showed a fall in profits, trading conditions had improved. It said its full-year results should be “modestly higher” than the current market consensus.

Biomass power plants generate electricity by burning a range of fuels including energy crops, wood chips and other material from renewable sources, the company said.