[UNITED KINGDOM] Drax signs £50m biomass deal

Electricity generator Drax, one of Britain's biggest single polluters, has signed a £50m deal with Alstom to develop a biomass facility to help fuel its coal-fired power plant at Selby, north-east England.The first phase of the 400-megawatt project, which will pump organic matter ground to a fine dust into each of the power plant's six production units to burn with coal, will be completed by the end of next year.

Drax will be entitled to government subsidies for renewable-energy sources, which means the biomass facility will contribute immediately to earnings, said chief executive Dorothy Thompson yesterday.

"It will be profitable from the outset. Burning biomass is not at the moment competitive with coal, without the support that the UK has for its renewable programme," she said.

The facility will handle about 1.5m tons of biomass annually, using organic matter such as olive stones or sunflower seed husks. Drax, which supplies about 7pc of the UK's energy needs, estimates that it will help reduce carbon dioxide emissions by 15pc once up and running.

[UNITED KINGDOM] Drax signs £50m biomass dealMeanwhile, the company announced that it expects full-year earnings to be modestly higher after an improvement in margins for coal-fired electricity. The news pushed up Drax shares, which closed up 30.5 at 676p.

UK power prices are up 30pc this year, but coal only 15pc, improving Drax's profit margins.

Source: The Telegraph|By Russell Hotten

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