The Department of Energy and Climate Change confirmed on Wednesday eight large-scale renewable projects would get support through contracts for difference (CfDs). It said the schemes involved £12 billion of investment to 2020 and would add 4.5GW of power generation capacity to the mix.
These included two biomass conversion projects: RWE’s Lynemouth power station and one unit at Drax. However, another unit at Drax was deemed eligible and “provisionally affordable” in December was missed off the list. It remains eligible for subsidy under the old Renewable Obligation regime. Drax shares fell 10 per cent to 673 pence at 9:30.
The independent generation company has taken legal advice and has “a good foundation to challenge this decision”, according to a statement.
Dorothy Thompson, chief executive at Drax, said: “Whilst we are pleased to have been offered an investment contract for our third unit conversion, we are disappointed by today’s decision on the ineligibility of our second unit. Nothing has changed, as far as our plans are concerned, between being deemed eligible in December and now. We have, therefore, commenced legal proceedings to challenge the decision.”
The company remains “fully committed” to its strategy to convert its 4GW Yorkshire coal power station to run mainly on biomass, she added. The first converted unit has been running for a year, with “strong” performance. Conversion of a fourth unit, out of six in total, is “under evaluation”.
There was more favourable news for SSE. Its Beatrice offshore windfarm was awarded a contract, despite having been missed off the list of “provisionally affordable” projects in December.
It follows a decision by SSE in March to slash its offshore wind programme and focus efforts on the 664MW Beatrice array.
Industry body Scottish Renewables welcomed the inclusion of Beatrice, the sole Scottish project to make the grade.
Lindsay Leask, senior policy manager at Scottish Renewables, said it was “greatly encouraging”. She added: “With our huge offshore wind resource, it is not unrealistic to expect to see a number of Scottish offshore wind projects receive planning consent and secure financial support by the end of the year.
“This decision will help kick-start the offshore wind sector in Scotland.”
Dong won contracts for Walney, Burbo and Hornsea offshore windfarms, as expected. Brent Cheshire, UK country chairman, said it would bring in £5 billion of investment. The contracts “will enable continued growth and investment in the UK supply chain as well as making an important contribution to reducing the cost of offshore wind for the benefit of all consumers,” he added.
Norwegion-owned Dudgeon was the fifth offshore windfarm confirmed for subsidies.
Renewable UK deputy chief executive Maf Smith said: “We’re pleased to see this vote in confidence for these five offshore wind projects, which will make an important contribution to keeping the lights on, and create much-needed growth in coastal areas.”
However, he warned that more such projects were needed over the next decade and the CfD regime must work for all renewable projects, not just those securing early approval.
The eighth successful project is a 299MW dedicated biomass plant with combined heat and power in Middlesborough, developed by MGT Power.