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The UK government said late Wednesday that it intends to award Drax an early subsidy contract for its second biomass conversion unit, pending the outcome of continued legal wrangling over the government’s decision to deem the project ineligible.
Drax won its High Court legal action against the government decision earlier this month to exclude the second conversion project from the Contracts for Difference (CfD) scheme, and the government has now said that it will move forward with the appeal process.
Pending the outcome of this next legal step, and the subject to European Commission approval, the company will receive its contract, said the Department of Energy and Climate Change (Decc).
Decc said that following the recent High Court judgment it reconsidered the application by Drax for an investment contract for its second unit conversion.
“Following that reconsideration, Decc now intends to award Drax an Investment Contract for this unit,” a statement from Decc said.
“However, Decc has now appealed against the High Court judgment to the Court of Appeal. Any award of an investment contract for the second unit conversion will therefore be dependent on the final conclusion of the legal challenge and remains subject to EU state aid clearance,” it added.
Drax was awarded an early investment contract for one of its biomass conversion units in April this year. The final conversion project will need to wait until September to determine how much budget is allocated to biomass conversion, or begin early enough to qualify for the government’s older ‘renewable obligation’ subsidy scheme.
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