Coal free future gives Drax £83m pre-tax loss
19th July 2017 | Commercial Energy
The operator of the UK’s largest power station has seen its share price slide after it posted a pre-tax loss of £83m in the first half of the year despite increasing earnings by 73%.
Drax Group, which runs a coal and biomass plant in North Yorkshire, boosted its earnings to £121m from £70m last year, due to its acquisition of the business energy supplier Opus Energy.
However, the power group made a pre-tax loss compared with the £184m profit in the first half of 2016, because of depreciation of its coal assets after the government set a target of phasing out use of the fossil fuel for power generation by 2025 and a £65m loss from currency hedging. Shares fell 4.25% to 330.8p.
Dorothy Thompson, Drax’s chief executive, revealed the company had submitted a planning application to convert one of its three remaining coal-fired units to gas, in the hope of winning a 15-year subsidy contract for providing backup power in winter.
“We are looking at opportunities for a coal-free future,” she told investors, adding that the possibility of switching a unit to gas was “looking good”. Ministers have said coal must be phased out entirely by 20205 to meet climate targets.
Thompson said the company, which already generates 68% of its power from burning wood pellets, would be lobbying the new government for financial support for further conversion to biomass – something previous governments have ruled out.
In a sign of the change afoot at what was once Europe’s most polluting power station, Drax also announced it had appointed the former chief of WWF-UK to its board.
David Nussbaum, chief executive of the Elders, a group of global leaders set up Nelson Mandela that promotes human rights and action on climate change, joins on 1 August in a non-executive role.
More information available on the website below