TIDMDRX
RNS Number : 5919R
Drax Group PLC
06 July 2022
6 July 2022
Drax Group plc
("Drax", "the Group", "Drax Group", "the Company"; Symbol:
DRX)
Six-month extension of coal operations at request of UK
Government
In response to increased pressure on European gas markets and
associated concerns about electricity security of supply in the UK
this winter, the UK Government has asked owners of legacy
coal-fired generation assets, including Drax, to work together with
National Grid to temporarily extend the life of their coal
generation assets to March 2023.
At the request of the UK Government, Drax has now entered into
an agreement with National Grid - in its capacity as the
electricity systems operator - pursuant to which its two coal-fired
units at Drax Power Station will remain available to provide a
"winter contingency" service to the UK power system from October
2022 until the end of March 2023. The units will not generate
commercially for the duration of the agreement and only operate if
and when instructed to do so by National Grid.
Under the terms of the agreement, Drax will be paid a fee for
the service and compensated for costs incurred, including coal
costs, in connection with the operation of the coal units in
accordance with the agreement.
Will Gardiner, Drax's Group CEO, said: "At the request of the UK
Government, Drax has agreed to delay the planned closure of its two
coal-fired units and help bolster the UK's energy security this
winter.
"Drax has played a central role in ensuring Britain's energy
security over several decades and our workforce is proud to be
providing this critical support to the UK energy system.
"Drax is the UK's largest generator of renewable power,
producing enough reliable, renewable electricity for 5 million
households from our sustainable biomass and hydro operations and we
remain committed to delivering a coal-free future.
"The UK's long-term energy security depends on investment in
innovative green technologies like bioenergy with carbon capture
and storage (BECCS), which provides reliable, renewable power
whilst permanently removing CO(2) from the atmosphere.
"Drax aims to invest billions of pounds developing BECCS in the
UK by 2030, provided that the UK Government has in place policies
to support the feasibility and delivery of negative emissions
technologies, which it has committed to developing this year."
Drax ended commercial operations on its two-remaining coal-fired
generation units in March 2021, and formal closure was planned for
September 2022, following the fulfilment of the Group's Capacity
Market obligations on these units.
A limited six-month extension to March 2023 is not expected to
result in a material level of coal generation(1) . Throughout 2021,
coal-fired generation accounted for 3% of the Group's generation
output and in the first three months of 2022, this was less than
1%, with the balance from renewables - sustainable biomass, pumped
storage and hydro.
The decision to end coal generation supports the Group's purpose
of enabling a zero-carbon, lower-cost energy future and the
transition to a flexible, renewable generation model. This has led
to a more than 95% reduction in the Group's Scope 1 and Scope 2
carbon emissions since 2012 and enabled Drax to become the UK's
largest source of renewable electricity by output.
Investment in renewables
To date, Drax has invested over GBP2 billion in renewables and
UK security of supply, with options for a further GBP3 billion to
be invested this decade, subject to the right investment
environment. These investment options include the development of
negative emissions technologies and pumped storage, which the UK
Government has said are necessary to decarbonise the electricity
generation sector by 2035 and reach net zero by 2050.
No expected impact on BECCS
Drax continues to expect to take a final investment decision on
its Drax Power Station BECCS project in 2024, subject to the right
investment environment and, in 2022, is investing incrementally in
the development of this option. This includes the removal of
certain coal infrastructure. A six-month extension of coal is not
expected to impact on the timing of a final investment decision or
intended commissioning date for the project. Site preparation works
for BECCS are ongoing and will accelerate following formal closure
of the coal units in March 2023.
The UK Government recognises the important role which BECCS has
to play in delivering net zero, requiring at least 5Mt of CO(2) per
year from BECCS and other engineered Greenhouse Gas Removals (GGR)
by 2030. To support this ambition, in July 2022, the UK Government
published a consultation on engineered GGR's. Separately, in order
to develop the financial model required to support BECCS - and
reflective of its advanced technological readiness and the
co-benefits of both power and negative emissions - the UK
Government is expected to publish a power BECCS business model
consultation during summer 2022.
The Group believes that negative emissions and BECCS represent a
trillion-dollar global market opportunity and is separately
continuing to develop options to deliver 4Mt of negative CO(2)
emissions each year from new-build BECCS outside of the UK by
2030.
Notes :
(1) Drax will work with National Grid to source up to
approximately 400,000 tonnes of additional coal (which together
with current stocks is enough for c.1TWh of electricity generation)
to deliver the service, and will only operate if and when
instructed to do so by National Grid.
Enquiries:
Drax Investor Relations: Mark Strafford
+44 (0) 7730 763 949
Media:
Drax External Communications: Ali Lewis
+44 (0) 7712 670 888
Website: www.Drax.com
END
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(END) Dow Jones Newswires
July 06, 2022 12:41 ET (16:41 GMT)
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