UK Power Group Set to Phase Out Coal

The Drax Group operates the UK’s largest power station, and in a country where government leaders have said all coal generation needs to be retired by 2025, Drax is moving forward with plans to convert its last three coal-fired units at the 3,960-MW power station near Selby in North Yorkshire to natural gas and biomass. Dorothy Thompson, the company’s chief executive, on July 19 told company investors “We are looking at opportunities for a coal-free future.”

The plant (Figure 1) currently operates three coal-fired and three biomass units at the plant, with 68% of its power supplied by burning wood pellets. The Drax station’s generating capacity is the second highest in Western Europe, trailing only the 4,400-MW Neurath Power Station in Germany.

Fig 1_Drax power plant
1. Turning green. The Drax Power Station’s first 660-MW unit was commissioned in 1974. By 1986, it had become the UK’s largest power station with a total capacity of nearly 4,000 MW. Built as a coal-fired facility, about 70% of its generation is now fueled by compressed wood pellets rather than coal. Courtesy: Drax Group

Drax’s plans to phase out coal perhaps sooner than anticipated have been triggered by regulation and economics. The company at the investors’ meeting reported a pre-tax loss of£83 million ($108 million) even though its earnings for the first half of 2017 increased 73% after its purchase of Opus Energy’s assets in 2016. The company also late last year acquired four open-cycle gas turbine (OCGT) projects, with a total generating capacity of about 1.2 GW, from Watt Power, part of Noble Group. Investors supported the acquisitions, but the company—as with others in Britain—saw its bottom line hammered by volatility in the value of the pound due to currency hedging after the Brexit vote. Drax reported that £65 million of its loss was due to hedging.

In order to recoup some of its losses, Thompson said the company would lobby the government for financial support for more conversion to biomass; previous governments have rejected the company’s requests for aid. Thompson at the meeting said Drax has been burning wood pellets on a trial basis in a fourth unit this year, but the unit would need expensive modifications to run full time on biomass, and it will run on coal this winter as the company considers whether to invest in the switchover.

The company’s investment in natural gas–fired generation includes the four OCGT projects, scheduled to begin operation in 2020, and Thompson said Drax also is looking at the feasibility of switching one of its last three coal-fired units at Selby to natural gas, with an eye toward a switchover in the winter of 2023–2024. The company already has submitted a planning application for the change and is studying the technical requirements for making the unit ready for carbon capture.

Though the government has mandated the moves away from coal, Thompson said it likely would have occurred regardless. She said coal generation at Selby was “pretty low” during the first half of the year, with overall power generation flat. “We now feel we have completely adapted to a world where coal generation is not about hard running all year,” she told investors.

Darrell Proctor and Sonal Patel, POWER associate editors.