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Drax welcomes UK government response on ROC consultation, plans to complete fourth conversion

UK power utility major Drax Group welcomes today's response from the UK Government to the consultation on cost control for further biomass conversions under the Renewable Obligation (RO) scheme. The company says that this will enable it to convert a fourth unit to biomass which it plans to complete as part of a major planned outage in the second half of 2018.

Will Gardiner, Chief Executive of Drax Group welcomes the UK Government’s support for further sustainable biomass generation at Drax (photo courtesy Drax).

Published today, the response from Department for Business, Energy & Industrial Strategy (BEIS) proposes that, rather than imposing a cap on Renewable Obligation Certificate (ROC) support for any future biomass unit conversions, a cap would be applied at the power station level across all ROC units. This would protect existing converted units and limit the amount of incremental ROCs attributable to additional unit conversions to 125 000 per annum.

The response would enable Drax to optimise its power generation from biomass across its three ROC units under the cap, whilst supporting the Government’s objective of controlling costs under the Renewable Obligation scheme.

According to a statement, Drax will now continue its work to deliver the low-cost conversion of a fourth biomass unit, accelerating the removal of coal-fired generation from the UK electricity system, whilst supporting the security of supply.

Drax says that it plans to complete the work on this unit as part of a major planned outage in the second half of 2018, before returning to service in late 2018. The capital cost is “significantly below” the level of previous conversions, re-purposing the existing co-firing facility on site to deliver biomass to the unit.

The unit will likely operate with lower availability than the three existing converted units, but the intention is for it to run at periods of higher demand, which are often those of higher carbon intensity, allowing optimisation of ROC generation across three ROC accredited units. The Contract for Difference (CfD) unit remains unaffected.

We welcome the Government’s support for further sustainable biomass generation at Drax, which will allow us to accelerate the removal of coal from the electricity system, replacing it with flexible low carbon renewable electricity. We look forward to implementing a cost-effective solution for our fourth biomass unit at Drax, said Will Gardiner, Chief Executive of Drax Group.

About the Renewables Obligation

The Renewables Obligation (RO) is one of the main support mechanisms for large-scale renewable electricity projects in the UK. The RO came into effect in 2002 in England and Wales, and Scotland (ROS), followed by Northern Ireland (NIRO) in 2005. It places an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources. The RO scheme policy is set by the Department for Business, Energy and Industrial Strategy (BEIS) and, in Northern Ireland, the Department for the Economy (DfE), but the scheme is administered by Ofgem.

In July 2011, the government announced it intended to close the RO, ROS and NIRO to all new generating capacity on 31 March 31, 2017, with a number of grace periods, which will allow generators to gain accreditation under the scheme in certain circumstances post-March 31, 2017.

 

To continue to support low-carbon electricity generation, the government has introduced the Contracts for Difference (CfD) scheme. This scheme is being administered by National Grid.

Renewable Obligation Certificates (ROCs) are certificates issued to operators of accredited renewable generating stations for the eligible renewable electricity they generate. Operators can trade ROCs with other parties. ROCs are ultimately used by suppliers to demonstrate that they have met their obligation.

Where suppliers do not present a sufficient number of ROCs to meet their obligation in the reporting period (one year), they must pay an equivalent amount into a buy-out fund. The administration cost of the scheme is recovered from the fund and the rest is distributed back to suppliers in proportion to the number of ROCs they produced in meeting their individual obligation.

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