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Drax Will Receive a Further Biomass Subsidy from the EU

23 Dec 13:00 by Steve Walia

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Shares in Drax jumped on news that the European Commission had approved a new subsidy for the power station's ongoing biomass project. This will allow a third tower at Drax to switch away from coal production to biomass wood pellets.

Located in Yorkshire, Drax is Europe's biggest coal-fired power station, and it has been systematically transferring its fuel to renewable biomass sources in a bid to become sustainable in its operation and to reduce damaging greenhouse commissions.

The government awarded Drax a green energy subsidy in 2014 for the same switch project, but an investigation into how state funding was being allocated paused the funding, with the commission believing that Drax would be over-compensated under the terms.

The Commission has now approved the subsidy, which means that the plant will receive a guaranteed price for the green energy that it produces. The EC carried out in-depth analysis which concluded that no over-compensation would result from the subsidy and that the wood market would not become overly distorted by the power plant ordering 2.4 million tonnes of wooden pellets every year.

The news comes at a time when coal power has fallen to record lows in the UK - a plummet of over 60pc compared to 2015, as green policies have affected various key coal plants. The last coal-fired power station in the UK is due to be shut down in 2025 as part of the UK's commitment to meet climate targets.

Drax is now hoping to secure further financial support in order to convert a fourth power unit so that it can use biomass. The government has said previously that this element of the drive to convert all six production towers is not eligible for a subsidy.