Drax sells gas turbine assets

Article by Amanda Jasi

The Rye House power station in Hertfordshire is amongst those which Drax is selling to electricity company VPI Holding.

DRAX has agreed to sell four combined cycle gas turbine (CCGT) power stations to electricity company VPI Holding for £193.3m (US$262m).

The stations are Damhead Creek (812 MW), Rye House (715 MW), Shoredam (420 MW) in the Southeast of England, and Blackburn Mill (60 MW) in Lancashire, England. The £193.3m total includes £29m that is contingent on satisfying certain factors related to the option to develop an additional CCGT at Damhead.

According to Drax, the CCGTs have performed well since the company acquired them in 2018 but they do not form part of its core flexible and renewable generation strategy.

Drax intends to use the proceeds from the sale to develop its biomass strategy, through which it intends to build a long-term future for sustainable biomass. The company aims to expand its supply chain from 1.5m t/y of self-supply today (with a further 0.5m t in development) to 5m t by 2027. It also plans to reduce the cost of biomass to £50/MWh.

The supply chain expansion will require additional capital and operating investment of about £600m, according to Drax, which it expects to invest ahead of 2027.

The power stations which Drax is selling are owned by Drax Generation Enterprise (DGEL), which also holds Drax’s pumped storage and hydro assets and is a shareholder in Daldowie fuel plant owner SMW. The fuel plant can convert 1,000 t of sewage sludge into 23.5 t of biomass pellets. These assets, shares, and employees will be transferred out of DGEL and retained by Drax. The 121 operational staff currently employed at the CCGTs will transfer with DGEL on completion of the sale.

Drax will support the transition throughout 2021.

Between 2012 and 2019 Drax reduced its carbon emissions by more than 85% and became the largest source of renewable electricity in UK through investment in biomass.

Will Gardner, CEO of Drax, said: “By focussing on our flexible and renewable generation activities in the UK we expect to deliver a further reduction in the group’s CO2 emissions, which should accelerate our ambition to become not just carbon neutral but carbon negative by 2030.

“By using carbon capture and storage with biomass (BECCS) at the power station in North Yorkshire to underpin the decarbonisation of the wider Humber region, we believe we would be creating and supporting around 50,000 new jobs and delivering a green economic recovery in the North.”

Drax announced its ambition of becoming carbon negative by 2030 in December 2019.

VPI Holding is owned by Vitol.

Article by Amanda Jasi

Staff reporter, The Chemical Engineer

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