Drax in major biomass energy investments.

On October 1st Drax Power Station announced a £10 million (US$18 million) Engineering, Procurement and Construction (”EPC”) contract with Doosan Babcock Energy Limited (”Doosan Babcock”) to supply direct injection biomass co-firing systems to all six coal-fired generating units at the 4,000MW Drax Power Station in North Yorkshire. These will be in operation by end 2009.(Doosan Babcock have been involved in large scale refurbishment projects in Kosovo and Serbia. )

Co-firing involves the mixing and burning of renewable biomass materials with coal and, given the carbon neutral status of biomass, is a recognised carbon abatement technology that has significant potential to reduce carbon dioxide (”CO2”) emissions from coal-fired power stations.

The direct injection firing systems represent a major component of the new co-firing facility at Drax and are designed to receive and transport processed biomass materials to the power station’s coal-fired boilers.

On completion, the biomass co-firing facility will be the largest of its type in the world, which alongside Drax’s existing co-firing capability will provide a total of 500MW of renewable electricity, or the equivalent output of over 600 wind turbines. In the half year report the company announced that the plant maintained a high plant availability of 93%.

3 new biomass plants planned jointly with Siemens

Drax have also announced plans to build, own and operate three 300MW biomass-fired generation plants in the UK at a cost of £2 Bn (Immingham , Drax and one to be decided). It has entered into a joint development agreement with Siemens (whose turbine technology will be used in the new plants) which will also own 40 % of the new business.

With all 3 plants running in 2014 Drax will supply 15 % of the UK's renewable power, and 10 % of total UK electricity supply. Commitments to construction contracts and financing will be finalised in the next 12-18 months.

Drax's equity investment will be funded by a cut in the dividend from 2010. The new distribution policy targets a pay-out ratio of 50 % of underlying earnings from 2010 onwards.