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Drax beat analysts’ expectations to report core earnings of £230 million in 2013, with strong operations mitigating the impact of rising carbon costs.
The power generation giant’s earnings before interest, tax, depreciation and amortisation (Ebitda) were down 23 per cent from £298 million in 2012, hit by the UK carbon floor price.
However, the unit converted to biomass in April performed better than hoped, with an output of 630MW making it only 0.5 per cent less efficient than coal.
Chief executive Dorothy Thompson said the company was “well placed” to secure subsidy contracts for difference (CfDs) to convert two more units to biomass.
The next conversions are planned for April 2015, when CfDs become effective, and the final quarter of 2015 “at the earliest”.
Drax tops the list of applicants to be given early approval for a CfD. Recent reports the early approval process could fall foul of European state aid rules have raised concerns of delay.
Thompson said: “In 2016, we expect half of Drax to be fuelled by sustainable biomass, some 4% of the UK’s electricity. In delivering this transformation, we will provide cost-effective, reliable renewable power to consumers, secure jobs at Drax and across the UK supply chain and deliver attractive returns for our investors.”
The generator is also pressing ahead with a two-year front end engineering and design (Feed) study for the White Rose carbon capture and storage project. Government officially approved the project for a share of a £1 billion CCS commercialisation fund in December.
Business retail arm Haven Power increased sales volumes by 59 per cent on 2012 levels.
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