Drax sells £190m of shares to invest in biomass conversion
The owner of the UK's largest power station, Drax, plans to sell £190m of shares in order to transform it into a predominantly biomass-fuelled power generator.
Drax plans on converting 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.
In order to complete the conversion, which it is estimated will cost between £650m and £700m, the company will take on £100m of new debt, it confirmed yesterday.
Drax will also release more than 36 million new shares worth 11 pence each, which will represent around 10% of the company to make up the funding.
The government announcement in July of smaller than expected subsidies for burning biomass with other fuels prompted Drax to ditch plans to spend at least £2bn on three dedicated biomass plants in Northern England and instead focus on biomass conversion.
The same announcement also spurred Centrica, the owner of British Gas, to announce on Wednesday it was ditching plans to build dedicated biomass power stations at Roosecote in Barrow-in-Furness and at Glanford Brigg in North Lincolnshire.
Bioeconomy consultants head of biomass and biogas NNFCC Lucy Hopwood said: "This is a significant move by Drax and one which is likely to go a long way towards meeting the UK's renewable energy obligations."
"By converting to biomass, Drax will prolong the lifespan of the existing power station, ensuring the UK maintains baseload energy capacity beyond 2015 when many coal-fired power plants are expected to close in order to meet the requirements of the large combustion plant directive," she added.