Drax to pay £25m after reporting failures over wood pellets

The owner of Britain’s largest power station has come under further fire from environmentalists after it failed to report accurate sustainability data about the sourcing of the wood pellets it burns to generate electricity.
The energy regulator has found that Drax failed to provide enough evidence over the profile of woody biomass consignments imported from Canada between April 2021 and March 2022.
The power generator has been told to pay £25 million into a redress fund, the second largest sum levied by the watchdog and almost a third of the £77 million in fines, redress payments and customer refunds obtained by Ofgem. The company also will resubmit its figures for the compliance period relating to the forestry type and saw-log proportions used in its plant.
“This has been a complex and detailed investigation,” Jonathan Brearley, Ofgem’s chief executive, said. “Energy consumers expect all companies, particularly those receiving millions of pounds annually in public subsidies, to comply with all their statutory requirements.”
However, there was no evidence that Drax’s biomass was not sustainable, nor that the company had been issued with renewables obligations certificates incorrectly.
The information related to additional details Drax is required to provide annually to Ofgem in relation to its supply chain, including the types of wood it burns. It is not used for the issuing of renewables obligations certificates. The company received £548 million in renewable certificates last year, which are funded via customers’ bills.
Will Gardiner, 60, Drax’s chief executive, said that the company recognised “the importance of maintaining a strong evidence base and are continuing to invest to improve confidence in our future reporting”.
Drax produces electricity at its eponymous power station in North Yorkshire. It has converted four units at the former coal-fired facility to burn biomass wood pellets that qualify for renewable energy subsidies on the basis that trees absorb carbon as they grow, offsetting the carbon emitted when they are burnt. However, burning biomass for energy has been controversial among some scientists and environmental groups.
“It’s astonishing that the investigation found Drax doesn’t have the data on where much of its wood comes from,” Phil MacDonald, the managing director at Ember, a climate think tank, said. “This must be a trigger for the secretary of state to now fully investigate the major issue here: whether wood burnt in UK power stations is genuinely sustainable.”
The existing subsidies regime comes to an end in 2027 and Drax is seeking to secure an extension to support its biomass plant until the end of the decade, when it hopes to have converted at least one of its units to bioenergy with carbon capture and storage technology.
“Burning wood is a simple technology, but Drax’s supply chain is a big and complicated system with many parts and each of those parts needs properly enforced monitoring and regulation to make sure carbon isn’t leaking out from any cut corners,” Doug Parr, the policy director of Greenpeace UK, said.
“Drax is operating without that enforcement and with an alarming lack of clarity over the real carbon intensity of its feedstock and the damage being done to the valuable forest ecosystems producing it.”
A spokeswoman for the Department for Energy Security and Net Zero said: “We expect full compliance with all regulatory obligations. Consumers rightly expect the highest standard of accountability from generators. The size of the redress payment underscores the robustness of the regulatory system and the requirement that generators abide by both the spirit and the letter of the regulations.”
Shares in Drax closed 2½p, or 0.4 per cent, lower at 653p.