Dec. 20 (Bloomberg) — Drax Group Plc received 100 million
pounds ($163 million) from Britain’s Green Investment Bank to
fund its $1 billion plan to convert the nation’s biggest coal-
fired power plant to burn wood pellets.
The GIB is providing the amortizing term loan alongside
Prudential Plc and the M&G U.K. Companies Financing Fund, which
committed equivalent funding in July, according to an e-mailed
statement today from the North Yorkshire-based utility. Drax
also obtained a 400 million-pound revolving credit facility
maturing in April 2016 from a group of banks to replace its
existing 310 million-pound line, it said.
Drax has now raised 790 million pounds that will cover the
cost of converting half its units at its site in Selby,
northeast England, to burn biomass in the next three to four
years. It plans to switch one of its six units to burn wood
pellets by June. It’s following RWE AG of Germany and the Dutch
utility Dong Energy A/S in switching to renewable fuels as they
strive to meet European Union air-pollution standards.
“We’re making very good progress with our project to
transform the largest coal plant in the U.K. into an electricity
generator fueled predominantly by sustainable biomass,” Tony Quinlan, finance director of Drax, said in the statement. “The
benefits are multiple, from securing jobs at Drax and across the
U.K. in the supply chain to providing low-carbon, cost-effective
and reliable renewable power.”
Britain’s biomass industry has gained momentum following
clarification of government support levels in July, alleviating
concerns from investors.
The Department of Energy and Climate Change estimates
bioenergy plants using wood chips and organic waste to produce
heat and power may meet 8 percent to 11 percent of the nation’s
primary energy demand in eight years.
To contact the reporter on this story:
Louise Downing in London at
ldowning4@bloomberg.net
To contact the editor responsible for this story:
Reed Landberg at
landberg@bloomberg.net
