Ministers halve subsidies for Drax wood power station

The government has halved subsidies for the Drax power station and ordered it to use 100% sustainable wood, after sustained criticism over its business model.

- Julia Kollewe

The large plant in North Yorkshire would play a "much more limited role" in future, operating less than half as often as it currently does, officials said.

The site is an important generator of electricity for the UK but has been criticised for burning wood pellets sourced from forests in the US and Canada.

The government has agreed a new deal with the power producer that will halve subsidies between 2027 and 2031, saying that Drax will provide power only when it is "really" needed. It estimates that this will save consumers £170m a year.

However, the company said it was targeting underlying profits of £100m to £200m a year over that period, and its shares rose almost 5% before easing slightly to a near 4% rise.

Greenpeace said continuing to subsidise biomass imports was a "dirty compromise with past failures".

The energy minister Michael Shanks said: "We believe that they [the subsidies] simply did not deliver a good enough deal for bill payers and enabled Drax to make unacceptably large profits.