Drax First Half Earnings Down Amid Heavy Biomass Investment

30 July 2013 Drax: continued invetment in biomass Drax Power’s earnings have fallen in line with expectations as it continued to invest heavily in biomass and carbon costs ramped up in the first half of 2013. The coal generator on Tuesday reported underlying earnings of £120 million in the six months ending 30 June 2013, down 22 per cent on the previous year. It invested £138 million in its capital programme, including £106 million in biomass. The first of three units to be switched from coal to run on biomass went live in April and is said to be performing to plan. Dorothy Thompson, chief executive of Drax, said: “We are investing significant capital this year and next to transform our business, with earnings during this period impacted by the increasing costs of carbon. However, as we move beyond this investment phase and replace substantial quantities of coal with sustainable biomass, we are confident that we will deliver attractive returns for our shareholders.” The company is considering whether it is attractive to convert further units with support from the contracts for difference being brought in through the government’s Energy Bill, she added. It is also looking at the opportunity for its coal generation to participate in the planned capacity market. The converted biomass unit has proven able to generate 585MW, around 10 per cent less than each coal burner. It has been available 76 per cent of the time since it started, which the company is confident will rise to 80 per cent on average for 2013. The load factor was lower, at 57 per cent, attributed to temporary fuel constraints. Drax is also investing to build up the biomass supply chain and construction has started at US pellet plants to prepare fuel for import to the UK. Haven Power, the company’s retail arm, is expanding. It increased sales 67 per cent to £323 million, or 3.7TWh, winning big customers including Muller and Santander. Drax aims to sell 12-15TWh through Haven in 2015. Source: Utility Week Taylor Scott International