Energy industry Watchdog's scrutiny comes as no surprise

The financial watchdog's decision to investigate sustainability claims made by the owners of the Drax power plant came as little surprise to Britain's energy industry.

- Jillian Ambrose

For years, the former coal generator has faced a torrent of criticism for collecting billions of pounds in renewable energy subsidies in exchange for burning wood pellets - shipped thousands of miles from North America - at its power plant in North Yorkshire.

Drax faces allegations that it may have misled investors, and the government over the sustainability of its wood sources.

In its investigation, the Financial Conduct Authority (FCA) will effectively follow in the footsteps of the industry regulator, Ofgem, as well as the National Audit Office and the public accounts committee in scrutinising whether the company's green claims stack up.

Drax is a relic of Britain's coal-rich industrial past. Built after the 1960s discovery of the Selby coalfield and opened in 1974, it burned coal for almost 50 years.

It expanded to become Britain's biggest power plant, generating enough electricity to power about 4m homes from almost 4 gigawatts of capacity.

As coal fell out of favour and Britain began turning to renewable power, Drax started converting its coal-burning units to run on biomass in 2013 - aided by a lucrative stream of subsidies.

The latest controversy circling the government's support for biomass is expected to raise fresh questions over the decision to extend its subsidies by almost £2bn by the end of the decade.