Coal-firing could continue at Drax, with the power giant revealing it has been asked by the government to consider options for a limited extension.
The move comes after the two legacy units at the North Yorkshire generator were called into the balancing mechanism for the UK grid in January.
Original agreements had expired last year, with the end of coal anticipated, but the soaring price of gas and European supply issues triggered by Russia’s invasion of Ukraine appear to have seen options kept open.
Read more: Hull to host major event for firms seeking work on Drax's huge Net Zero project
In a first quarter trading update today, Drax revealed use had been absolutely minimal, with more than 99 per cent of electricity produced from renewable sources.
It has seen a huge transformation to biomass at the North Yorkshire plant over the past decade, while selling gas-fired assets elsewhere.
It also owns hydro and pumped storage facilities, while progressing huge plans for bioenergy with carbon capture and storage (BECCS).
Reporting earnings around the top end of expectations in the trading update, chief executive Will Gardiner said: “In the first quarter of 2022 we delivered a strong system support performance as our reliable, renewable electricity continued to support UK energy security and helped to keep the lights on for millions of British homes and businesses.
“We advanced our strategy to increase biomass pellet production, with another 400Kt of capacity commissioned from two new pellet plants in the US. We also progressed the engineering design work for our UK BECCS project, which will deliver negative emissions and pioneer BECCS technology at scale. BECCS is a vital carbon removals technology that the UN’s IPCC says is needed globally to achieve net zero.
“With the right government support, Drax is ready to invest £3 billion this decade in delivering vital renewable energy technologies including BECCS, a carbon removal technology that is cost-effective but also the only one that generates reliable, renewable electricity while removing millions of tonnes of CO2 from the atmosphere.”
On coal, the company said: “Drax's two legacy coal units were called into the balancing mechanism by the system operator in January for limited operations to support security of supply. These short-term measures helped to stabilise the power system during periods of system stress and did not result in any material increase in the group's total carbon emissions.
“Drax continues to expect to formally close these two legacy coal units following the fulfilment of their capacity market obligations in September 2022 but remains committed to supporting security of supply in the UK. Drax has recently been asked by the UK Government to consider options for a limited extension of its coal operations and this remains under review.”
In response to the conflict in Ukraine, and sanctions imposed, Drax has removed a small amount of Russian and Belarussian biomass from its supply chain, leading to “higher prices and lower availability in the small European spot market, adding incremental costs and limiting the potential to source additional cargoes to support incrementally higher levels of generation in 2022.”
Stateside capacity is closing in on five million tonnes, with a 60/40 split between contracted third party supply and own use.
On the BECCS project, it anticipates the selection and support scheme to emerge from government this year, with a final investment decision anticipated in 2024.
It is looking at North American and European replication too by 2030.
Full year earnings are anticipated around the top range of analyst expectations.
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