Report details the economic, employment impact of Drax conversion

By Erin Voegele | September 13, 2016

Oxford Economics recently released a report that details the total impact of Drax Group on the U.K. economy, reporting that Drax contributed approximately £1.2 billion ($1.58 billion) to the U.K.’s gross domestic product (GDP) in 2015 while supporting an estimated 14,150 jobs throughout the country. The total impact takes into consideration supply chain activities and the wages that the company’s staff and suppliers’ staff spend in the wider consumer economy.

The direct GDP impact of Drax in 2015, primarily its wages and sum profit, was £284 million. In addition, the company directly employed nearly 1,300 people.

The report estimates that converting three of Drax’s six generation units to burn wood pellets involved £365 million in capital expenditures in the U.K. by the Drax Group over a six-year period. The work involved in the conversion includes modification to generation units, the construction of facilities to receive and store wood pellets, and the implementation of new control and safety apparatus. According to the report, the conversion generated more than £430 million in GDP, when measured in 2016 prices, and supported more than 7,000 annual jobs.

The conversion also required a large, specialized freight and logistics infrastructure to be developed in order to import, storage and deliver wood pellet fuel to the power plant. This work was completed by Drax and its partners, including the Port of Tyne, Port of Liverpool, the Humber ports of Immingham and Hull, DB Cargo U.K. and GB Railfreight. The report notes port operators, freight service providers and rail wagon manufacturers all undertook work linked to the biomass conversion. Over the past eight years, these capital investments are estimated to have contributed nearly £280 million to U.K. GDP, measured in 2016 prices. They also support approximately 4,400 annual jobs. In addition, the newly developed biomass infrastructure is also supporting a range of permanent jobs.

Oxford Economics estimates the total economic contribution of Drax and its partners has accounted for more than £710 million in GDP since 2009, when measured in today’s prices.

“This report shows Drax is supporting more than 14,000 jobs across the U.K., with the vast majority resulting from our upgrades to biomass technology,” said Dorothy Thompson, CEO of the Drax Group. “The economic benefit has reached all parts of the country. We have been the catalyst for rejuvenation and growth across the Northern Powerhouse with port expansion on the coasts of East Yorkshire, the North West and North East. Drax is now the U.K.’s biggest single generator of renewable power. With the right support from Government we aim to upgrade more of our electricity production to using compressed wood pellets. This would provide a further boost to the U.K. economy, and deliver increased carbon savings.”

“Drax Group makes an important economic contribution to Yorkshire and the Humber, and the U.K. more widely. Its activities generated over £1 billion in GDP last year, and sustained thousands of jobs across the nation,” said Sam Moore, managing director of consultancy at Oxford Economics. “In addition, ambitious investments by the group and its partners in regional biomass infrastructure have driven huge demand, and supported many more thousands of jobs. The Drax upgrades to use biomass in place of coal are also environmentally and strategically very significant, in the context of the wider challenges for the U.K.’s energy system.”

A full copy of the report can be downloaded from the Drax website.