(Montel) UK independent power generator Drax hiked biomass-fired generation levels 16% in the first half to 7.4 TWh, amid strong regional demand for renewables and the looming closure of its remaining coal units, it said on Wednesday.
Drax – which operates a 3.9 GW plant in North Yorkshire, as well as some other related businesses – reported a 30% year-on-year rise in first half group earnings before interest, tax, depreciation and amortisation (Ebitda) to GBP 179m.
This reflected high levels of renewable power generation, system support services, the reinstatement of capacity market payments and a strong performance in pellet production, it said.
These factors offset the impact of Covid-19 on the customers business, it added.
Drax plans to close its last two coal-fired units next April.
The other four 654 MW units have been converted in recent years to run on 100% biomass, predominantly fuelled by imported material, some of which Drax produces itself.
Pellet production
The firm produced 0.75m tonnes of its own wood pellets from production facilities in the US over the six-month period, representing a 15% increase on the year.
“[This was due to] good fibre availability compared to H1 2019 which, due to heavy rainfall, experienced restricted commercial forestry activity and a lower level of low-cost fibre availability,” it said.
Output was also helped by lower production costs of USD 154/t, compared with USD 170/t in January-June last year.
The firm plans to expand its own production to 5m tonnes by 2027, from capacity of around 1.5m tonnes at present.
“We expect global demand for wood pellets to increase by around 60% this decade, inclusive of Drax’s requirement, as other countries develop decarbonisation programmes which acknowledge the benefits of sustainable biomass for generation,” it said.
Whilst there was an abundance of sustainable biomass globally, there remains limited wood pellet production capacity, it said.
Global demand
“As a result, we expect the global market for biomass to remain structurally short,” it said, adding it was therefore exploring options to service biomass demand in other markets, such as Europe, the US and Asia, alongside the UK.
Drax’s portfolio produced 6% of the UK’s power between October last year and March 2020 – the most recent period for which data is available) – with Drax Power Station alone producing 10% of the country’s renewable electricity, it said.
Workers at the Drax plant are mulling the possibility of strike action after rejecting a recent offer on redundancies due to next year’s impending coal-unit closures, Montel reported.
