Carbon capture by Drax could add £1bn to household bills every year

According to estimates by a leading energy think-tank, installing carbon capture and storage at Britain’s biggest power station could eventually cost bill payers an extra £1 billion per year.

Drax said it will spend billions on the conversion of two of its four power stations in Selby, North Yorkshire to Beccs or bioenergy with CO2 capture and storage.

According to a recent analysis by Ember, if the FTSE250 group were to convert all four power units, as it has stated in the past, then the cost to run the power plant could reach £1.7 billion a yearly. This compares to average subsidies of £785million between 2018 and 2022.

The cost to convert all units was estimated at £1.3bn in a previous estimate by the think-tank. It attributed this increase to the higher projected costs of wood pellets. Estimates assume the Beccs facility operates under a contract of 25 years.

Carbon capture and storage is an energy intensive technology. Ember explained that adding ember to a biomass power plant would use some of the heat normally used to generate electricity. This would mean that more wood would have to be burned to get the same amount.

Drax has converted four units of its power station from coal to wood pellets. This process is eligible for renewable energy subsidies because trees absorb carbon while they grow and offset the carbon they emit when they are burned.

Drax received £617 Million in payments in 2022 from the energy bill payers. The environmental credentials of Drax’s biomass pellets that are primarily imported from North America have been a contentious issue for many years.

Claire Coutinho is expected to start a consultation on a “bridging method” this month to keep the plant operating without subsidies between the years 2027 and 2030. The biomass subsidies will end in 2027, and it’s unclear if wholesale electricity prices are high enough to allow Drax to run without financial assistance.

Carbon capture has raised doubts about its environmental benefits.

The government has said that it intends to put in place a dual-contracts-for-difference model to support investment in Beccs projects, linked to both low-carbon electricity and negative emissions.

Tom Harrison, an Ember analyst, stated: “If Drax’s Beccs Project goes forward, the UK consumer of energy could be locked in to decades of higher bills, without any guarantee that they are receiving the negative emissions for which they pay.”

Carbon capture and storage is a technology that uses carbon dioxide captured from industrial facilities such as oil refineries and chemical plants to store it instead of releasing into the air and contributing climate change. Drax claims its carbon capture units can remove 8 million tonnes of CO2 from the air each year, making the power plant carbon negative.

A spokesperson for the company said: “This new Ember Analysis veers between factual errors and a number of misguided assumption. The report also fails to explain the cost of replacing Drax’s reliable generation, and the costs associated with keeping the lights on.

Drax Power Station operates using the same mechanism as almost all UK electricity generators. It is the UK’s largest power station, producing 4% of the nation’s electricity and 9% of renewable electricity. This power plant plays a crucial role in the energy security of the UK.