Campaigners have slammed the Government for refusing to address the loopholes in the energy subsidies scheme that allegedly allowed Drax to game the system at the expense of ordinary households.
Energy Secretary Claire Coutinho last week sidestepped claims that there are gaps in the regime, which mean cash-strapped families are losing out to profiteering energy firms.
Reports from Bloomberg this summer accused the North Yorkshire-based power generation giant of manipulating the Government’s subsidies so that households lost out on as much as £639million in payouts from April 2022.
When asked about this investigation at an environmental committee last Wednesday, Coutinho refused to confirm that the Government would address any loopholes and ensure consumers got a fairer deal.
Cash generator: Drax’s North Yorkshire power plant. The North Yorkshire-based power generation giant has been accused of manipulating Government’s subsidies
She said: ‘We get about 10 per cent or so of our electricity supply from biomass. I think it is really important that it is genuinely net zero when we are using those schemes.
‘That is a policy we are developing at the moment.
‘We have some rigorous biomass standards in place, but we are trying to make sure those are as robust as possible’.
Under the subsidy deal agreed with ministers, Drax’s earnings at its generator are capped once electricity prices are high enough for it to comfortably make money without subsidies – and any extra cash is returned to bill payers.
But Drax allegedly halted production at its tax-payer-backed biomass generator for weeks at a time, according to Bloomberg, meaning it did not have to give millions of pounds back to consumers.
Critics attacked Drax’s strategy and flaws in the system itself.
Speaking last night, Simon Francis, founder of Campaign Collective, told the Mail: ‘We would urge the Government not to continue to sidestep difficult decisions across our broken energy system and reform it so that it is fit for this winter and beyond.
Loopholes: Claire Coutinho
‘The contrast couldn’t be more stark. On the one hand, we have firms making huge profits, and on the other vulnerable households are left in energy debt and unable to afford to heat more than one room at a time.’
Drax, which looks set to make profits of as much as £438million for the year to December, often touts its green credentials, claiming it was the UK’s largest source of renewable power last year and played ‘a significant role’ in bolstering energy security.
The Government considers burning wood and other biomass to be carbon neutral – despite the fact that carbon dioxide absorbed by trees is released back into the atmosphere during the process. And Drax received £617million in Government support last year alone for its biomass units.
Matt Williams, senior advocate for the Natural Resources Defence Council, a US-based environmental advocacy group, told the Mail: ‘Energy bills this winter are expected to be just as high as last year, leaving many families staring down the barrel of tough choices. The UK’s large-scale, forest-burning bioenergy industry needs dismantling.
‘But the Government seems more concerned with figuring out how to hand over billions more of the public’s money in years to come.’
A Department for Energy Security and Net Zero spokesman said: ‘The Contracts for Difference scheme [which encourage investment in renewable energy] has been hugely successful, securing around 30GW of new low carbon electricity capacity since it began in 2014.
‘It does not, however, stipulate when projects should operate. This is a commercial decision for individual generators, which do not receive top-up payments when they are not generating.’
Drax has denied Bloomberg’s allegations.