Ofgem investigates Drax on biomass reporting rules

Shares of North Yorkshire power generator Drax Group fell as much as 6% after UK energy regulator Ofgem said it has launched a formal investigation into whether the wood pellets burned by Drax to generate electricity in its plant breached sustainability rules.

Ofgem last year began examining whether Drax had complied with the UK’s biomass sustainability rules.

“We are investigating whether Drax Power Limited is in breach of annual profiling reporting requirements relating to the Renewables Obligations scheme and other related matters,” said Ofgem.

“The opening of this investigation does not imply that we have made any findings about possible non-compliance by Drax Power Limited.”

A BBC documentary has raised questions about whether the wood that Drax procured from Canada was sustainably sourced.

Expert opinion is divided among scientists over whether burning woody biomass for energy is an environmentally sustainable and low-emissions alternative to fossil fuels.

Drax said in a stock exchange statement: “Drax notes the announcement today of an Ofgem investigation into Drax Power Limited’s annual biomass profiling reporting under the Renewables Obligation scheme.

Ofgem’s announcement states that the opening of an investigation does not imply any finding of non-compliance.

“It has separately confirmed that it has not established any non-compliance that would affect the issuance of Renewable Obligation Certificates (ROCs) to Drax, and therefore the associated financial benefit.

Like all energy generators, Drax receives regular requests from Ofgem and continues to cooperate fully throughout this process.

Last year Drax appointed a third party to independently verify the accuracy of its biomass sustainability and profiling data as part of an ongoing process.

“Drax is confident in the compliance of its biomass with the Renewables Obligation criteria.”