Drax reports progress with expansion of pellet production

By Erin Voegele | February 28, 2022

Drax Group plc highlighted progress made towards its goal of ramping up wood pellet production to 8 million metric tons by 2030 while reducing production costs in its 2021 financial report, released Feb. 24.

“2021 was a transformational year for Drax as we became the world's leading sustainable biomass generation and supply company, whilst continuing to invest in delivering positive outcomes for the climate, nature and people,” said Will Gardiner, CEO of Drax. "Over the past ten years Drax has invested over £2 billion in renewable energy and has plans to invest a further £3 billion this decade, supporting the global transition to a low-carbon economy. Our investment has reduced our emissions from power generation by over 95 percent and we are the U.K.'s largest producer of renewable power by output. We are proud to be one of the lowest carbon intensity power generators in Europe—a significant transformation from being the largest coal power station in Western Europe.

"We have significantly advanced our plans for bioenergy with carbon capture and storage (BECCS) in the U.K. and globally,” Gardiner added. “By 2030 we aim to deliver 12 million [metric tons] of negative emissions and lead the world in providing a critical technology which scientists agree is key to delivering the global transition to net zero."

The financial report discusses several steps Drax took last year to increase its wood pellet production capacity, including the acquisition of Canadian pellet producer Pinnacle Renewable Energy. Following the acquisition, Drax now has 17 pellet plants and developments spanning three major fiber baskets with a combined capacity of approximately 5 million metric tons per year.

The company produced 3.1 million metric tons of wood pellets in 2021, up from 1.5 million metric tons in 2020. The total cost of production was $143 per ton, down 7 percent when compared to the $153 per ton reported for 2020.

In the U.S. Southeast, Drax added approximately 600,000 metric tons of new production capacity last year. The company completed expansions at its LaSalle and Morehouse pellet plants in Louisiana and begin commissioning activities at the Demopolis, Alabama, pellet plant and its Leola plant in Arkansas, which is the first of three satellite plants under development in the state. Construction is also underway on the Russellville plant, the second of the three planned satellite plants in Arkansas.

Drax is currently the U.K.’s largest generator of renewable power by output, accounting for 12 percent of the country’s renewable electricity production. The financial report outlines several ongoing cost reductions to support biomass power production at Drax Power Station from 2027. This includes a third biomass turbine upgrade and trials to expand the range of lower cost sustainable biomass—with up to 35 percent blend achieved in test runs on one unit.

Drax reported £398 million in adjusted EBITDA for 2021, down from £412 million in 2020. Adjusted basic earnings per share reached 26.5 pence, compared to 29.6 pence in 2020. Operating profit was £197 million, compared to an operating loss of £156 in 2020. Profit before taxes was £122 million last year, compared to a loss before taxes of £235 million in 2020.