21
Accepted
Prior evidence suggests Drax gamed subsidy system, raising doubts about new agreement robustness.
Conclusion
An investigation conducted by Bloomberg in 2022 concluded that Drax may previously have gamed its support to the detriment of consumers. It found that Drax shut down power generation and sold wood pellets on the open market to avoid paying back £639 million of subsidies as wholesale electricity prices spiked. Although DESNZ reassured us that the new arrangements will be more robust, it did not offer any explanation of how it had made sure that there would be no loopholes that allow Drax to continue to game the system.59
Government Response Summary
The government agrees with the recommendation and is considering options to publish the plans for sustainability enforcement under the new Drax contract by December 2025, also working closely with Ofgem and LCCC on sustainability assurance roles.
Government Response
Accepted
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Target implementation date: December 2025 DESNZ recognises the importance of transparency in ensuring public confidence in the sustainability of the biomass used in UK electricity generation. As such, the department is considering options to publish the plans for sustainability enforcement under the new contract with Drax. The department also works closely with Ofgem and LCCC to co-develop the role both parties will play in sustainability assurance and ensure this is resourced appropriately. Ofgem recover costs from the licensed companies they regulate. Licensees must pay an annual licence fee, which is set to cover Ofgem’s costs. Ofgem’s overall budget is agreed at a Spending Review. Any additional oversight responsibilities must be considered in the round to ensure they are proportionate and represent good value for money.
Source
Committee
Public Accounts Committee
Inquiry
Government support for biomass
Report
22nd Report - Government’s support for biomass
25 Apr 2025
HC 715
Addressee Bodies
HM Treasury
Timeline
Recommendation age
1.3 yr
Report published
25 Apr 2025