Drax considering alternatives to new gas turbines

The boss of Drax has revealed the group is considering alternatives to replacement of its coal units with new gas turbines, saying “the lifetime of gas is probably getting shorter”.

Chief executive Will Gardiner was speaking to Utility Week after the company announced plans this morning to cease generation from its two remaining coal units from March 2021.

The units will remain available until September 2022 to fulfil their remaining Capacity Market agreements but will be operated with a significantly reduced team. The decision comes after neither unit secured an agreement in the recent T-3 for auction for delivery starting the following month.

Drax had at one point hoped to convert the units to run on biomass as it has already done for the other four units at the plant. But the company instead opted to replace them with 3.6GW of combined-cycle gas turbines (CCGTs) and up to 200MW of battery storage after the government scaled back its support for new biomass conversions.

In May 2018, the firm applied for planning permission for the project and last October was granted consent by the energy secretary at the time, Andrea Leadsom, against the recommendations of the Planning Inspectorate.

Then at the beginning of this year, environmental law firm ClientEarth launched a legal challenge against the government’s decision, saying it is inconsistent with the UK’s climate change targets.

“There are multiple challenges with gas,” Gardiner told Utility Week.

Recent capacity auctions have “cleared at levels that don’t support any of our gas projects” and Drax does not want to make an investment decision until there is “more clarity” on the implications of the judicial review requested by ClientEarth.

Growing public concern over the climate crisis also means “the lifetime of gas is probably getting shorter, not longer.”

“It’s always been conditional on getting the right capacity contracts,” he added. “It’s also now conditional on getting the right outcome from the judicial review. And it’s also frankly something where we may have other options like converting those units to be stability machines as in synchronous compensators.”

Gardiner was making reference to the new stability service incorporating both reactive power and inertia being trialled by the electricity system operator (ESO) at National Grid. The first contracts were awarded earlier this year and among the winners was Drax’s Cruachan pumped storage hydropower plant in Scotland.

The company will operate the plants’ turbines as synchronous compensators – devices that can provide system inertia without generating power – and is considering converting its coal units or replacing them with purpose-built assets: “We’re quite excited about this because at the end of the day these types of services supporting wind and solar power will be needed for a long time and they are completely carbon neutral so they are very good things for the system.”

He said the plans for a battery storage facility are “very much linked” with the gas repowering project and therefore unlikely to proceed if it does not.

The comments mark a shift in sentiment since Drax Power chief executive Andy Koss told Utility Week in 2018 that Drax was “confident” over the prospects for new gas, despite failing to win contracts for two of its gas projects in the preceding T-4 capacity auction. The clearing price of £8.44/kW was lowest to date for a T-4.

In the meantime, the Capacity Market has undergone a year-long suspension during which payments were held up and auctions were cancelled.

The replacement for last year’s T-4 auction was held at the end of January as a T-3 auction. Drax entered five new-build gas projects – four 300MW open-cycle gas turbines and a 1.8GW CCGT – but none secured agreements as the clearing price fell to just £6.44/kW.

Last year, Drax began capturing carbon emissions from one its biomass units and is eventually hoping to transform the power station into the anchor point for a carbon capture and storage network that would serve a zero-carbon industrial in the Humber region.

In the run-up to the recent general election, prime minister Boris Johnson pledged to invest £800 million in the infrastructure needed to support projects such as this. Gardiner said he is hoping to receive “more visibility” over how the money will be spent in the upcoming budget, adding: “My guess is over the course of the year that money will be allocated to one or more clusters.”

By the end of 2020, he expects that “a lot of the regulatory framework will be in place for both the capture and also the transport and storage”.