UK electricity generator Drax is under scrutiny following a Bloomberg investigation that alleges the withholding of £639 million from households during the country’s ongoing cost of living crisis.
The investigation reveals that a generator at Drax’s giant power plant has received £1.4 billion in green energy subsidies from consumers since December 2016.
These subsidies were meant to promote the use of renewable energy sources like “biomass” pellets made from wood.
However, a consumer safeguard was in place to ensure that if electricity prices rose enough for Drax’s generator to be profitable without subsidies, the excess earnings should be returned to consumers.
According to Bloomberg’s analysis of power market records, Drax opted to idle its “Unit 1” generator, which qualified for subsidies and instead used other units not subject to earnings caps.
A Drax spokesperson told Energy Live News: “The allegations made by Bloomberg are false, inaccurate, and misleading. Drax was a net buyer of pellets in this period to enable the plant to generate baseload power to keep Britain’s lights on and was the single largest generator of renewable electricity in the country last year.
“No serious observer of the energy system would advocate that we ought to have exposed Britain’s power grid and our business to increased risks.
“The Russian invasion created unprecedented challenges to the electricity market due to constrained fuel supplies, leading to an increase in both the demand for biomass and the price of pellets. Given this, we had to make responsible decisions on our winter hedging to minimise risk to Britain’s energy security and our business.
“Our RO units were already hedged for the period, so we took the responsible decision to preserve supplies for Winter 2022 by not hedging the now uneconomical Contract for Difference (CfD) unit. We kept the CfD unit in reserve, available to either cover an unexpected outage of one of our other units, or to be dispatched in times of system stress.
“The unit did run in line with its availability when system margins were tight and prompt prices made it economical.”
