UK utility company Drax reported a 20.5% decrease in its purchase of EU emissions allowances (EUAs) in 2015, reflecting its ongoing transition from coal to wood pellets, according to its annual results. Drax bought 13.2 million EUAs last year, down from 16.6 million in 2014. The company's power generation remained stable at 26.7 TWh, but coal-fired power production decreased by 19% compared to 2014, as biomass output increased. By Q4 2015, over half of Drax's power generation came from biomass, and the company had a 43:57% ratio of biomass to coal output for the year, compared to 29:71% in 2014.
Two of Drax's six generating units now burn wood pellets, mainly sourced from the US, while a third unit has partially co-fired biomass since the summer 2015, pending full conversion clearance under EU state aid rules. Drax's carbon costs increased by £31 million in 2015, contributing to a 10% decline in gross profit to £390 million. This increase in costs is largely attributed to the UK government's nearly doubled carbon floor tax, which rose to £18.08/tCO2 from £9.55 last April. Drax's CEO, Dorothy Thompson, stated that the company may consider mothballing its coal units and focusing solely on biomass, as the UK aims to close all coal-fired power plants by 2025. Thompson emphasized the potential for Drax's biomass technology to help the UK further decarbonize its power sector with the right support framework.
