Temporary Cost-Plus Revenue Limit and CfD
12 October 2022
Drax Group plc
("Drax" or the "Group"; Symbol: DRX)
Temporary Cost-Plus Revenue Limit and Voluntary CfD Legislation
Drax notes the UK Government's plan to introduce an Energy Prices Bill which will include legislation for a temporary cost-plus revenue limit for renewable electricity generation and a voluntary Contracts for Difference (CfD) process.
The Government's statement notes that details of the temporary cost-plus revenue limit will be subject to a consultation to be launched shortly, ahead of it coming into force from the start of 2023.
It also recognises the importance of dispatchable and baseload generation, such as biomass, for security of supply and that these technologies have higher input costs, which will be considered as part of the detailed policy design.
Drax will continue to work with Government and industry on the detail of the proposal.
Will Gardiner, Drax Group CEO, said: "The Government's statement recognises the unique role that biomass plays in the UK energy system and its higher input costs. We will continue to engage with the Government on the specific details of the legislation as it continues to be developed.
"Drax is the UK's largest source of renewable electricity by output and our sustainable biomass provides enough renewable electricity for four million households, playing a critical role in keeping the lights on - whatever the weather. We plan to invest £3bn in our UK carbon removal, renewable power, system support and supply chain projects in the 2020s, demonstrating our commitment to UK energy security and net zero.
"Our biomass operations support around 6,000 jobs throughout the North of England and thousands more jobs will be created and supported through our investment in Bioenergy with Carbon Capture and Storage (BECCS)."
The Energy Prices Bill will also include legislation that will allow for a voluntary CfD process for existing generators to take place in 2023, providing generators with longer term revenue certainty.
Drax will update as appropriate based on the outcome of this process.
A link to the Government's statement is copied below.
Enquiries:
Drax Investor Relations: Mark Strafford
+44 (0) 7730 763 949
Media:
Drax External Communications: Ali Lewis
+44 (0) 7712 670 888
Website: www.drax.com
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