Drax investing to increase pellets self-supply and reduce cost
In the UK, Drax Group plc has outlined details of the Group's key strategic objective of building a long-term future for sustainable biomass focusing on opportunities to reduce its cost of biomass at Drax Power station to a level that is economic without subsidy in 2027.
Presented during a Capital Markets Day on November 19, 2019, these savings will be delivered through further optimisation of its existing wood pellet operations, Drax Biomass Inc., in the United States (US) and greater utilisation of low-cost wood residues; an expansion of the fuel envelope to incorporate other renewable fuels and; a significant expansion of self-supply capacity.
Drax is targeting five million tonnes of self-supply wood pellet capacity by 2027. This is over a tripling of the current 1.5 million tonnes combined pellet production of its three US Gulf facilities.
At the 2019 half-year results, Drax announced it was investing around £50 million (≈ EUR 59 million) in low-cost capacity expansion at these three existing sites adding a total 350 000 tonnes of new capacity (LaSalle BioEnergy 150 000 tonnes, Amite BioEnergy 100 000 tonnes and Morehouse BioEnergy 100 000 tonnes) by 2021.
Drax will continue to work with its current suppliers to develop its portfolio and said that it is “evaluating options” to deliver an additional three million tonnes of capacity. These options include smaller scale pellet facilities, around 40 000 tonnes, strategically located in the southeast US and which could function as satellite plants.
These activities would enable Drax to develop an unsubsidised biomass generation business by 2027, with the option to service wood pellet demand in other markets in Europe, North America, and Asia.
Drax’s purpose is to enable a zero-carbon lower-cost energy future. We believe sustainable biomass has a long-term critical role to play. That’s why we plan to supply 80 percent of our biomass from our own sources – a significant increase on the 20 percent we currently self-supply. Supplying more of our own biomass will cut costs and reduce supply chain risks, ensuring our biomass power generation remains viable in the long term. When combined with carbon capture it will also enable negative emissions, helping the UK on its path to net-zero by 2050, said Will Gardiner, Drax Group CEO.