Drax: Biomass needed to balance ‘unreliable’ wind and solar
Biomass will have an important role to play in the UK's future energy mix thanks to its ability to balance supply from more unreliable technologies such as wind and solar.
That’s according to biomass generator Drax, which today (28 July), published its half-year report, detailing earnings before interest, taxes, depreciation and amortization (EBITDA) of £120m – a year-on-year increase of 18%.
Writing in the chief executive’s overview, Drax CEO Dorothy Thompson said the strong performance should continue thanks to the ability of biomass to balance power supply and demand.
Thompson wrote: “Aggregate wind farm and solar output in the UK can be expected to fall below 1% of total electricity production with reasonable regularity.
“However, an electricity supply that includes highly variable energy sources can still be reliable overall, so long as there is enough flexible plant in the generation mix to respond quickly to changes in the supply/demand balance.
“If that plant can do so in a low carbon manner then it is all the more advantageous. It is for this reason that we believe electricity generated from sustainable biomass should play a central and long-term role in the future energy mix of the UK and why we remain convinced of the long-term value inherent within the Group.”
Thompson added that the market for balancing the UKs power demand should be worth £2bn in five years time.
The positive outlook is a marked contrast from just three weeks ago, when the Chancellor announced that renewables such as biomass would no longer be exempt from the Climate Change Levy.
The move, which is expected to cost Drax £90m over the next two years, also caused the company’s share prices to drop 28% immediately after the announcement.
In her overview, Thompson said the decision was a “shock to the industry, representing an about-turn in a well-entrenched policy that has been a key underpinning for renewable investments since 2001”.
However, she said Drax has reorganised, and expects to complete the conversion of a third power unit to biomass by the end of 2017.
The half-year report also readdressed concerns that biomass was still a net contributor to climate change.
The report claimed: “The weight of academic evidence from around the world states that sustainable biomass is significantly lower in carbon emissions than coal. All Drax biomass is sustainable and procured against a robust industry leading policy which is independently audited and verified.”
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