UK

Drax to Pay £25 Million Following Ofgem Biomass Probe

By City A.M - Aug 30, 2024

Power station operator Drax has agreed to pay £25m after an investigation by energy watchdog Ofgem found it failed to report data adequately.

Drax, which receives hefty Government subsidies from burning biomass wood chips, lacked the necessary data governance and controls in place, according to Ofgem.

This meant it did not give the regulator accurate and robust data on the type of wood it uses.

Ofgem did not find any evidence that Drax’s biomass is not sustainable or that Drax had been issued renewables obligation certificates (ROCs) incorrectly.

Ofgem said Drax will pay £25m to its voluntary redress fund as a result of the findings.

The fine comes after an investigation into the sustainability of the biomass it uses at its wood-burning power plant, which was subject of a major BBC Panorama documentary.

Drax Group chief executive, Will Gardiner said: “It is welcome that Ofgem has found no evidence that our biomass failed to meet the sustainability criteria of the Renewables Obligation (RO) scheme, nor that the ROCs we received for the renewable power we produced had been provided incorrectly.”

“Although Ofgem has noted there is no evidence to suggest Drax deliberately misreported its profiling data, we recognise the importance of maintaining a strong evidence base and are continuing to invest to improve confidence in our future reporting.”

Ofgem chief executive Jonathan Brearley said: “This has been a complex and detailed investigation. Energy consumers expect all companies, particularly those receiving millions of pounds annually in public subsidies to comply with all their statutory requirements. 

“There are no excuses for Drax’s admission that it did not comply with its mandatory requirement to give Ofgem accurate and robust data on the exact types of Canadian wood it utilises. The legislation is clear about Drax’s obligations – that’s why we took tough action. 

“Drax has accepted that it had weak procedures, controls and governance which resulted in inaccurate reporting of data about the forestry type and sawlog content being used. It has agreed to make a significant payment of £25m to our voluntary redress fund and carry out an independent external audit of its global profiling data reporting.  

“This report will be submitted to Ofgem for our independent assessment and findings published, so the conclusions are fully transparent.? While Ofgem currently has no reason to believe there have been further instances of non-compliance we won’t hesitate to act if required.” 

A spokesperson for the Department for Energy Security and Net Zero said: “We expect full compliance with all regulatory obligations – consumers rightly expect the highest standard of accountability from generators.

“The size of the redress payment underscores the robustness of the regulatory system and the requirement that generators abide by both the spirit and the letter of the regulations.

“The detail of the investigation and subsequent findings are a matter for Ofgem.” 

With contribution from Press Association

By City AM