UK Government Signs Contract With Drax

Drax confirms it has signed a contract with the UK Government for a low-carbon dispatchable CfD (Contract for Difference) agreement to cover all four biomass units at Drax Power Station over the period April 2027 to March 2031.

“We are pleased to have agreed to this new contract with the UK Government, which will support UK energy security into the 2030s and deliver a net saving for consumers compared to alternative sources of dispatchable generation,” the company states.

Drax will have an annual 6TWh generation collar. Under the agreement, Drax Power Station can step in to increase generation when there isn’t enough electricity, potentially avoiding the need to burn more gas or import power from Europe. When there’s too much electricity, Drax can turn down and help to balance the system.

Analysis from Baringa has indicated that the short-term support for Drax Power Station is expected to result in a net saving for consumers of between £1.6-3.1billion (U.S. $2 to $4 billion) over the term of the agreement, compared to alternative sources of dispatchable generation.

The agreement includes enhanced biomass sustainability requirements, including ensuring that all biomass used at Drax Power Station is sustainably sourced and substantiated through monitoring, reporting, and verification requirements, including enhanced auditing of the biomass supply chain.

However, the contract means the annual demand for pellet fuel by the four Drax units will be significantly lower than it has been, by perhaps a few million tonnes.