Drax: harness a range of renewables to provide £2bn consumer price cut

Consumers could save more than £2 billion if the Government’s planned renewable energy auctions are opened up to include a wider mix of technologies, says the Drax Group.

Drax, which operates the UK’s largest power station in Selby, Yorkshire, using mainly bio-mass products to supply 8% of the UK’s electricity, is not currently eligible to participate in the auctions.

It has commissioned NERA Economic Consulting and Imperial College to look at what it describes as “hidden costs that are not reflected in the contracts Government awards for renewable generation”.

It claims these “hidden costs, or whole system costs, are increasing as intermittent renewables – those reliant on the sun and wind - increase. These intermittent renewables mean other forms of power generation need to kick in, and flex up and down to meet electricity demand. These costs are passed on to consumers via their energy bills.”

Drax’s commissioned research shows significant differences in the true costs of renewables once these additional costs are recognised, claims Drax. It says offshore wind could require a CfD of £127 per MWh, onshore wind £92-97 per MWh, solar £96 per MWh, and biomass £84 per MWh.

It adds: “Once these new support levels are modelled over the planned energy auctions, the new energy mix that could win contracts is shown to save consumers £1.9 -£2.2 billion. This support is already paid for through energy bills and the new cost-efficient mix would lessen the impact.”

The research has been released as the Government is set to stage  three auctions for new renewable energy contracts – Contracts for Difference (CfDs) - planned over the next four years, with all three focused on offshore wind. 

Drax Group CEO, Dorothy Thompson commented: “This independent research shows it’s crucial we get the right mix of energy generation.  The UK’s system faces growing challenges, from costs to reliability as traditional forms of generation are replaced with renewables.

“Intermittent renewables like wind and solar are vital as we continue to clean up energy generation, but they need to be backed up by a constant supply of electricity that can be flexed up and down to make sure the UK’s businesses and households always have power on demand.

“Opening up energy auctions to include other renewables could save consumers £2 billion and with more biomass in the mix energy, security is also boosted.  Using the latest technology we’ve upgraded half our power station to run on compressed wood pellets, which give an 80% plus carbon saving against coal. With the right support we stand ready to finish the job.”