Drax one step closer to biomass conversion project with £75m loan
The owner of the UK's largest power station, Drax, has today announced it has agreed a £75m private loan, underpinned by a Government guarantee to fund its biomass conversion project.
Last year Drax announced plans to convert three of its six units to biogas, turning the North Yorkshire coal-fired power station into one of the largest renewable energy plants in Europe. (link)
It is estimated that the project will cost between £650m and £700m and this latest loan from investment company Friends Life, means that Drax has enough capital to cover the project.
The agreement is the first to be considered as part of the Government's UK Guarantees Scheme, which was launched last year to provide up to £40bn of guarantees to kick start infrastructure projects struggling to access finance.
The latest loan facility replaces £50m of the £100m loan agreed with the UK Green Investment Bank, which was signed in December 2012.
Drax finance director Tony Quinlan said: "This further strengthens our balance sheet, as we progress our project to transform the largest coal-fired power station in the UK into an electricity generator fuelled predominantly by sustainable biomass.
"The benefits are multiple, from securing jobs at Drax and across the UK in the supply chain to providing low carbon, cost effective and reliable renewable power for the consumer."