* Biomass growth cuts carbon tax costs
* Third unit conversion awaits EU ruling
A 73% increase in biomass generation in the first half of 2015 helped Drax Group boost overall electricity generation by 8.5% year on year to 14 TWh, the UK generator said Tuesday.
Biomass generation rose to 5.2 TWh in H1 2015 from 3 TWh in H1 2014.
A 17.6% rise in gross earnings for the six months to GBP120 million ($187 million) reflected good operations at the coal/biomass-fired power plant in North Yorkshire, with biomass “protecting the business from the increasing cost of UK carbon tax,” Drax said.
The group restated that the government’s removal in the July 8 Budget of Levy Exemption Certificates would cost the generator around GBP30 million in H2 2015 and GBP60 million in 2016.
With two of Drax’ six 660-MW units converted to biomass, the subsidized fuel source accounted for 37% of net power sales in H1 2015 up from 23% in H1 2014.
The company said it was still awaiting an EU state aid decision on the award of a Contract for Difference for its third unit conversion.
In May 2014 the government offered Drax the 15-year contract, guaranteeing a strike price of GBP105/MWh in 2012 prices.
While Drax reported good progress with near-term biomass volumes, lower volumes were being contracted from 2016/17.
Clearance of the CfD “would underpin acceleration of long-term supply chain development,” it said.
Its Baton Rouge US port facility was now fully operational and exporting biomass pellets while its Morehouse pellet plant was up and running and its Amite pellet plant was in final commissioning, the generator said.
Retail sales through Haven Power were up from 5.6 TWh in H1 2014 to 6.8 TWh in H1 2015.
Sales of GBP629 million were up from GBP513 million over the period.
H1 investment of GBP54 million meant Drax was on track, it said, to complete biomass transformation in line with its original cost guidance of GBP650 million-GBP700 million, to include three unit conversions, US supply chain investments and compliance with the EU’s Industrial Emissions Directive.
