Drax reveals £83m pre-tax loss for first half of 2017

Drax Group Plc has blamed currency hedging and depreciation of its coal generation assets for the firm’s £83m pre-tax loss, announced in its results for the six months ending 30 June 2017.

Cheif executive Dorothy Thompson said: “Delivering reliable renewable electricity remains at the heart of our business. We continue to produce at record levels, helping to keep the UK’s electricity system secure and supplying our customers through our retail business. With the right conditions, we can do even more. We are progressing our four new rapid response gas power projects and our research and innovation work has identified potentially attractive options to repurpose our remaining coal assets.”

Thompson said that work to repurpose the company’s coal units included “continued engagement with Government to make the case for further biomass upgrades”. She added: “During H1 2017 we have been running a trial on one of our coal units to examine the feasibility of a low cost solution for fuelling it with 100% compressed wood pellets using existing co-firing infrastructure. The unit has performed well but there is further work to do to ensure that it delivers high output reliably and safely on a sustained basis, which we believe is achievable. In view of this, we will continue our trial through the summer, but have decided to return the unit to coal fuelling this winter to ensure high availability through the colder months.”

Biomass, in the form of compressed wood pellets, accounted for 68% of the firm’s generation over the six months. Thompson said the company.  Thompson said: “The biomass we use to generate electricity provides a 68% carbon emissions saving against gas. This calculation factors in supply chain emissions associated with manufacturing and transportation. Our biomass life-cycle carbon emissions are 34g CO2/ MJ, less than half of the UK Government’s 79g CO2/ MJ limit.”

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Are we about to say farewell to coal?

A long haul for biomass Most biomass burnt in the UK is imported and there appears to be plenty of fuel around for feedstock contracts. But is vertical integration sustainable or are there more efficient routes? And is policy stable enough for investors?

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