Drax Group plc on Nov. 5 confirmed it has signed a contract with the U.K. government that will provide transitional support for all four of the biomass units at Drax Power Station from April 2027 through March 2031.&nbsp;The U.K.’s current biomass power subsidies are set to end in 2027. The U.K. Department for Energy Security and Net Zero&nbsp;in early 2024&nbsp;<a href="https://biomassmagazine.com/articles/uk-considers-extending-subsidies-for-large-scale-biomass-power-producers">announced</a>&nbsp;it would consider extending subsidies for biomass power producers that plan to develop bioenergy with carbon capture and storage (BECCS) capacity.&nbsp;In February 2025, the agency <a href="https://biomassmagazine.com/articles/uk-to-offer-transitional-support-to-large-scale-biomass-power-generators">announced</a> it would move forward with a short-term support mechanism for large-scale biomass generators. Drax in July <a href="https://biomassmagazine.com/articles/drax-confirms-progress-on-agreement-for-new-power-subsidies-reports-record-high-pellet-production">confirmed plans</a> to sign a final agreement with the U.K. government before the end of the year establishing a low-carbon dispatchable contract for difference (CfD) to support transitional operations at Drax Power Station. &nbsp;&nbsp;&nbsp;Drax on Nov. 5 announced it has now signed that agreement with the U.K. government’s Low Carbon Contracts Co. (LCCC). The low-carbon dispatchable CfD will cover all four biomass units at Drax Power Station over the period&nbsp;April 2027&nbsp;to&nbsp;March 2031, with a strike price of&nbsp;£109.90/MWh (2012, real).&nbsp;The terms of the agreement are largely unchanged when compared to what was announced in February. The strike price, however, has been reduced to reflect favorable movements in exchange rates, which are expected to reduce the overall cost of biomass. The change is not expected to have a material impact on expected adjusted EBITDA.&nbsp;Under the agreement, Drax Power Station will sell 6 terawatt hours (TWh) of power annually against a season ahead reference price, as per the current CfD scheme, and then seek to maximize generation from its four units at times of high demand and reduce generation at times of low demand. The station’s flexibility will support U.K. energy security and capture higher prices, similar to facility’s operation under the Renewable Obligation Certificate scheme. The agreement allows for additional merchant generation above 6TWh, system support and ancillary services, where Drax continues to play an active role.Drax also noted the agreement includes enhanced biomass sustainability requirements, including that all biomass used at&nbsp;Drax Power Station&nbsp;is sustainably sourced and verified through monitoring, reporting, and verification requirements, including enhanced auditing of the biomass supply chain. The company said it welcomes these enhancements to its existing procedures, which demonstrate the group's commitment to delivering climate, nature and people positive outcomes."We are pleased to have agreed this new contract with the&nbsp;U.K. government, which will support&nbsp;U.K.&nbsp;energy security into the 2030s and deliver a net saving for consumers compared to alternative sources of dispatchable generation,” said Will Gardiner, CEO of Drax.&nbsp;"The agreement will support the rollout of intermittent renewable generation across the&nbsp;U.K.&nbsp;and provides options to ensure&nbsp;Drax Power Station&nbsp;continues to play a long-term role in the regional economy and&nbsp;U.K.&nbsp;energy system,” he added."Independent analysis by&nbsp;Baringa&nbsp;estimates savings of up to&nbsp;£3.1 billion&nbsp;over the four-year term, all while ensuring&nbsp;Drax Power Station&nbsp;keeps the lights on for millions of homes and businesses, no matter the weather."&nbsp;&nbsp;&nbsp;

2025-11-05 - Drax signs low-carbon dispatchable CfD contract agreement with UK government  (Biomass Magazine)

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Drax Group plc on Nov. 5 confirmed it has signed a contract with the U.K. government that will provide transitional support for all four of the biomass units at Drax Power Station from April 2027 through March 2031. 

Drax signs low-carbon dispatchable CfD contract agreement with UK government

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