Drax to pay £25m following Ofgem Biomass Probe

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

Drax, which receives important subsidies from the Government from the burning of biomass wood chips, did not have the necessary data governance and controls in place, according to Ofgem.

This meant that it did not provide the regulator with accurate and robust data about the type of wood it uses.

Ofgem found no evidence that Drax’s biomass was unsustainable or that Drax was incorrectly issued Renewable Obligation Certificates (ROCs).

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

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

Drax Group Chief Executive Will Gardiner said: “It is welcome that Ofgem found no evidence that our biomass did not meet the sustainability criteria of the Renewables Obligation (RO) scheme, nor that the ROCs we -we received for the renewable energy we produced were supplied incorrectly.”

“While Ofgem has noted that there is no evidence to suggest that Drax has deliberately misreported its profiling data, we recognize the importance of maintaining a strong evidence base and continue to invest to improve confidence in our future reports.”

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

“There is no excuse for Drax’s admission that it failed to comply with the mandatory requirement to provide Ofgem with accurate and robust data about the exact types of Canadian timber it uses. The law is clear about Drax’s obligations – that’s why we took tough action.

“Drax accepted that it had poor procedures, controls and governance which resulted in incorrect reporting of data on the type of forestry and log content used. It has agreed to make a significant payment of £25 million to our voluntary compensation fund and to conduct an independent external audit of its global profiling data reporting.

“This report will be submitted to Ofgem for our independent assessment and publication of the findings, so the findings are fully transparent. Although Ofgem currently has no reason to believe that there have been any further cases of non-compliance, we will not hesitate to take action if necessary.”

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 responsibility from generators.

“The size of the compensation payment underscores the robustness of the regulatory system and the requirement that generators comply with both the spirit and the letter of the regulations.

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

With the contribution of the Press Association

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