Drax Biomass Subsidies Rise To £558 Million
By Paul Homewood
Drax have just published their provisional annual accounts for 2016.
Underlying earnings have fallen from £46m to £21m.
Once again, the figures show just how dependent the whole Drax operation is on biomass subsidies. Year on year, sales of ROCs have increased by £96m to £548m.
http://www.drax.com/investors/results-and-reports/#investor-relations-presentations
Just as significantly, the third biomass unit came on stream on Dec 21st. This receives subsidies via the CfD mechanism, which is much more generous than ROCs, which are worth about £40/MWh.
Under the Cfd, Drax receive a guaranteed, index linked payment of £106/MWh at current prices. With market wholesale prices of £47/MWH at the moment, this means that Drax will receive a subsidy of £59/MWh.
Just in ten days, this has generated £10m of income for Drax. Although it is unlikely to continue at this rate during summer months, it could easily bring in £300m in a full year.
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