European Commission Approves CfD Contract

RNS Number : 2424S

Drax Group PLC

19 December 2016

 

19 December 2016

Drax Group plc

("Drax" or the "Company"; Symbol:DRX)

European Commission Approves CfD Contract

Drax confirms that the European Commission (EC) has today approved the CfD Investment Contract⁽¹⁾, awarded to Drax by the UK Government, for its third biomass unit conversion.

http://europa.eu/rapid/press-release_IP-16-4462_en.htm

The strike price remains £100/MWh⁽²⁾ and there are no changes to the terms of the contract.

The unit will commence operating as a fully converted biomass unit under this contract in the coming days, having previously operated as a co-firing unit under the Renewables Obligation.

Approval of this contract was a condition of the proposed acquisition of Opus Energy and today's announcement represents a positive step towards the completion of this process.

Dorothy Thompson, Chief Executive Officer of Drax Group, said:

"We are pleased the European Commission has completed its review of the contract and approved it in line with our expectations. We now look forward to fully converting the unit to run on sustainable biomass.

"Drax is already playing a vital role in helping change the way energy is generated, supplied and used as the UK moves to a low carbon future.

"With the right conditions, we can do even more, converting further units at Drax to use sustainable biomass in place of coal and through rapid response gas projects to plug the gaps created by intermittent renewables.

"Our plans for greater diversification will deliver a package of reliable, affordable electricity to the UK's households and businesses."

Enquiries:

Drax Investor Relations: Mark Strafford

[phone]

Media:

Drax External Communications: Paul Hodgson

[phone]

Website: www.drax.com

Notes:

(1)   The Government introduced Contracts for Difference (CfDs), which are long-term contracts, to support the development of low carbon electricity generation. To avoid an investment hiatus in the renewables sector before CfDs become available under the enduring regime, the Government introduced a scheme for Investment Contracts under the Final Investment Decision Enabling ("FID Enabling") for Renewables mechanism. These were 'early' CfDs intended to provide greater confidence for investors in advance of the enduring CfD.

(2)   Price in 2012 terms.

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