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Drax Coal to Biomass Conversion CfD Appeal Defeated

Final Round KO to DECC

drax power logoDrax Energy, Europe’s largest coal fired power station has accepted defeat in their bid to overturn the government’s controversial decision to renege on a subsidy agreement under their flagship contracts for differences (CfDs) scheme.

Drax had been told they would receive subsidies for converting a further two of their coal fired units to biomass however when the awards were announced earlier this year, Drax were awarded just one.

Immediately Drax threatened legal proceedings and the process became acrimonious very quickly. Only last month the balance of power seemed to sit with Drax as the High Court ruled in their favour saying the second unit was eligible for the so-called investment contract contrary to the government’s claims.

But now Drax has admitted defeat after the Court of Appeal ruled in favour of DECC and Drax have confirmed that they will not appeal the surprise decision.

The Court of Appeal ruled that DECC had acted within its rights in excluding the disputed Drax unit from applying for the scheme in favour of supporting a competing offshore wind project.

A Drax spokesman said:

“Drax confirms that the Court of Appeal has reached a decision in relation to the appeal by the Department of Energy and Climate Change against the High Court judgment that Drax’s second unit conversion is eligible for an investment contract.

“The Court of Appeal has allowed DECC’s appeal and dismissed Drax’s application for Judicial Review. Accordingly, the second unit conversion is no longer eligible for an investment contract. Having taken legal advice, Drax will not appeal against this decision.”

That decision signals the end of a long and regretful saga for DECC and Drax.

Already DECC’s decision making had been called into question when Offshore wind was preferred to more mature, cheaper and more efficient technologies such as Onshore wind. With the whole CfD bidding process open to suspicions that the Conservative administration’s dislike of Onshore wind was behind DECC’s selective technology awards.

Retreating to the moral high ground however Drax have announced that they will press on regardless with the conversion of their 3rd unit to biomass under the less generous but still available Renewables Obligation scheme.

Quite how it has come to this merely underlines the increasing politicisation of the energy industry, a politicisation that doesn’t bode well for a smooth future for security of supply and reliable availability.

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