Tag: biomass energy

Evaluating regrowth post-harvest with accurate data and satellite imagery

  • Drax has been using effective post-harvest evaluations, which includes remote sensing technology and satellite imagery

  • Alongside sustainable forest management, monitoring can help support rapid regrowth after harvesting

  • Evidence shows healthy managed forests with no signs of deforestation or degradation

As part of Drax’s world-leading programme of demonstrating biomass sustainability, including ongoing work on catchment area analysis (CAA), responsible sourcing policy and healthy forest landscapes (HFL). We have also been trialling the use of high-resolution satellite imagery to monitor forest conditions on specific harvesting sites in the years after harvesting has taken place, in addition to the catchment area level monitoring of trends and data. Post-harvest evaluations (PHE) are an essential part of an ongoing sustainability monitoring process, ensuring that the future forest resource is protected and maintained and that landowners restore forests after harvesting to prevent deforestation or degradation.

The most effective form of PHE is for an experienced local forester to walk and survey the harvesting site to check that new trees are growing and that the health and quality of the young replacement forest is maintained.

Rapid regrowth

The images below show some of the sites surrounding Drax’s Amite Bioenergy pellet plant in Mississippi, with trees at various stages of regrowth in the years after harvesting.

A full site inspection can therefore enable a forester to determine whether the quantity and distribution of healthy trees is sufficient to make a productive forest, equivalent to the area that was harvested. It can also identify if there are any health problems, pest damage or management issues such as  weed growth or water-logging that should be resolved.

Typically, this will be the responsibility of the forest owner or their forest manager and is a regular part of ongoing forest management activity. This degree of survey and assessment is not practical or cost-effective where a third-party consumer of wood fibre purchases a small proportion (typically 20-25 tonnes per acre) of the low-grade fibre produced at a harvest as a one-off transaction for its wood pellet plant..  It is time consuming to walk every acre of restocked forest and it is not always possible to get an owner’s permission to access their land.

Forests from space

Therefore, an alternative methodology is required to make an assessment about the condition of forest lands that have been harvested to supply biomass, without the need to physically inspect each site.  One option is to use remote sensing and satellite imagery to view each harvested site in the years after biomass sourcing, this helps to monitor restocking and new tree growth.

Drax has been testing the remote sensing approach using Maxar’s commercial satellite imagery.  Maxar has four satellites on orbit that collect more than three million square kilometres of high-resolution imagery every day. Drax accesses this imagery through Maxar’s subscription service SecureWatch.

To test the viability of this methodology, Drax has been looking at harvesting sites in Mississippi that supplied biomass to the Amite Bioenergy pellet plant in 2015 and in 2017.  As part of the sustainability checks that are carried out prior to purchasing wood fibre, Drax collects information on each harvesting tract. This includes the location of the site, the type of harvest, the owner’s long-term management intentions and species and volume details.

This data can then be used at a later date to revisit the site and monitor the condition of the area. Third-party auditors, for instance Through Sustainable Biomass Program (SBP) certification, do visit harvesting sites, however this is typically during the year of harvest rather than after restocking. Maxar has historical imagery of this region from 2010, which is prior to any harvesting for wood pellets.  The image below shows a harvesting site near the pellet plant at Gloster, Mississippi, before any harvesting has taken place.

March 2010 (100m)

Satellite image © 2021 Maxar Technologies.

The image below shows the same site in 2017 immediately following harvesting.

December 2017 (100m)

Satellite image © 2021 Maxar Technologies.

If we look again at this same site three years after harvesting, we can see the rows of trees that have been planted and the quality of the regrowth. This series of images demonstrates that this harvested area has remained a forest, has not been subject to deforestation and that the regrowth appears to be healthy at this stage.

August 2020 (50m)

Satellite image © 2021 Maxar Technologies.

Another site in the Amite catchment area is shown below. The image shows a mature forest prior to harvesting, the site has been previously thinned as can be seen from the thinned rows that are evident in the imagery.

May 2010 (200m)

Satellite image © 2021 Maxar Technologies.

Looking at the same site in the year after harvesting, the clear cut area can be seen clearly. Some green vegetation cover can also be seen on the harvested area, but this is weed growth rather than replanted trees. Some areas of mature trees have been left at the time of harvesting, and are visible as a grey colour in the 2010 image. These are likely to be streamside management zones that have been left to maintain biodiversity and to protect water quality, with the grey winter colouring suggesting that they are hardwoods.

September 2018 (200m)

Satellite image © 2021 Maxar Technologies.

Three years after the harvest, in a zoomed in view from the previous image, clear rows of replanted trees can be seen in the imagery.  This demonstrates that the owner has successfully restocked the forest area and that the newly planted forest appears healthy and well established.

August 2020 (50m)

Satellite image © 2021 Maxar Technologies.

While examining different harvesting sites in satellite imagery, Drax noted that not every site had evidence of tree growth, particularly within the first three years after harvesting. Deliberate conversion of land to non-forest use, such as for conversion to pasture, agricultural crops or urban development, is likely to be evident fairly soon after harvesting.

Preparing for planting

Some forest owners like to leave a harvested site unplanted for a couple of years to allow ground vegetation and weed growth to establish, this can then be treated to ensure that trees can be planted and that the weed growth does not impede the establishment of the new forest, this process can mean that trees are not visible in satellite imagery for three to four years after harvesting.

The image below shows a site three years after harvesting with no evidence of tree growth.  Given that no conversion of land use is evident and that the site appears to be clear of weed growth, this is likely to be an example of where the owners have waited to clear the site of weeds prior to replanting.  This site can be monitored in future imagery from the Maxar satellites to ensure that forest regrowth does take place.

November 2020 (100m)

Satellite image © 2021 Maxar Technologies.

Drax will continue to use Maxar’s SecureWatch platform to monitor the regrowth of harvesting sites and will publish more detailed results and analysis when this process has been developed further.  The platform allows ongoing comparison of a site over time and could prove a more efficient method of analysis than ground survey.  In conjunction with the CAA and HFL work, PHE can add remote sensing as a valuable monitoring and evidence-gathering tool to demonstrate robust biomass sustainability standards and a positive environmental impact.

Go deeper: 

Discover the steps we take to ensure our wood pellet supply chain is better for our forests, our planet and our future here, how to plant more trees and better manage them, our responsible sourcing policy for biomass from sustainable forests and a guide to sustainable forest management of the Southern Working Forest.

Robust trading and operational performance in Q1-2021, progressing biomass strategy

RNS Number : 0962W
Drax Group plc
(“Drax” or the “Group”; Symbol:DRX)

Highlights

  • Robust trading and operational performance during the first three months of 2021
  • Completion of acquisition of Pinnacle Renewable Energy Inc. (Pinnacle)
  • Strong balance sheet and cash flows
    • Continue to expect net debt to Adjusted EBITDA(1) of around 2 x by the end of 2022
  • Continued focus on clean energy generation and a reduction in carbon emissions
    • Commercial coal generation ended in March 2021, with full closure in September 2022
    • Sale of existing gas generation assets in January 2021
  • Sustainable and growing dividend
    • Final dividend of 10.3 pence per share – subject to shareholder approval at AGM
    • Total dividends of 17.1 pence per share, 7.5% y-o-y growth

Will Gardiner, Drax Group CEO, said:

“In the first quarter of 2021 we delivered a robust trading and operational performance, alongside steps to further decarbonise the business and support our flexible and renewable generation strategy. These include the end of commercial coal generation, the sale of our gas power stations and just last week we acquired leading Canadian biomass producer Pinnacle Renewable Energy Inc.

Drax Group CEO Will Gardiner in the control room at Drax Power Station

Drax Group CEO Will Gardiner in the control room at Drax Power Station [Click to view/download]

“The acquisition of Pinnacle positions Drax as the world’s leading sustainable biomass generation and supply business. This advances our strategy to increase self-supply, reduce our own cost of biomass production and create a long-term future for sustainable bioenergy, which will pave the way for the development of negative emissions from Bioenergy with Carbon Capture and Storage (BECCS). BECCS at Drax would make a significant contribution to the UK reaching its new target to cut carbon emissions by 78% by 2035.”

Trading, operational performance and outlook

The trading and operational performance of the Group has been robust in the first three months of 2021. Full year expectations for the Group remain underpinned by continued good operational availability for the remainder of 2021.

Generation

Drax’s generation portfolio has performed well with good asset availability and optimisation across its portfolio, including a strong system support performance from Cruachan (pumped storage), underpinning a solid financial performance.

During the summer Drax will, as previously announced, undertake planned maintenance on its CfD(2) biomass unit, including a high-pressure turbine upgrade to reduce maintenance costs and improve thermal efficiency, contributing to lower generation costs for Drax Power Station.

In March 2021 Drax secured Capacity Market agreements for its hydro and pumped storage assets worth around £10 million for the delivery period October 2024 to September 2025.

Drax also secured 15-year agreements for three new 299MW system support Open Cycle Gas Turbine (OCGT) projects in England and Wales. As the UK transitions towards a net zero economy it will become increasingly dependent on intermittent renewable generation.  As such, fast response system support technologies, such as these OCGTs, are increasingly important in enabling the UK energy system to run more frequently and securely on intermittent renewable generation. Drax is continuing to evaluate options for these projects including their potential sale.

Pellet Production

Pellet Production has performed well with good production and cost reduction plans on track.

On 13 April 2021, Drax completed its acquisition of Pinnacle. The acquisition advances the Group’s biomass strategy by more than doubling its sustainable biomass production capacity, significantly reducing its cost of production and adding a major biomass supply business, underpinned by long-term third-party supply contracts.

The Group’s enlarged supply chain will have access to 4.9 million tonnes of operational capacity from 2022. Of this total, 2.9 million tonnes are available for Drax’s self-supply requirements in 2022 (increasing to 3.4 million tonnes in 2027).

The acquisition positions Drax as the world’s leading sustainable biomass generation and supply business alongside the continued development of its ambition to be a carbon negative company by 2030, using BECCS.

Pinnacle’s performance in the first three months of 2021 was in line with Drax’s expectations through the acquisition process. Drax will update on full year expectations including Pinnacle at its half year results on 29 July 2021.

Customers

The Group’s I&C(3) supply business performed well. It continues to provide a route to market for Drax’s power and renewable products to high credit quality counterparties as well as opportunities to complement the Group’s system support capabilities.

Trading desk at Haven Power, Ipswich

Trading desk at Haven Power, Ipswich

The SME(4) supply business continued to be affected by the ongoing Covid-19 restrictions in the first three months of 2021. Drax is continuing to explore operational and strategic options for this segment of the business.

Balance sheet

As at 31 March 2021, Drax had cash and total committed facilities of £801 million.

Drax will retain Pinnacle’s existing debt facilities within the enlarged Group’s capital structure but will consider opportunities to optimise its balance sheet with lower cost sources of debt.

Drax continues to expect net debt to Adjusted EBITDA to return to its long-term target of around 2 x by the end of 2022.

Generation contracted power sales

As at 16 April 2021, Drax had 25.7TWh of power sales contracted at £49.0/MWh as follows:

 202120222023
Fixed price power sales (TWh) 15.07.53.2
Contracted % versus 2020 full year output (5)101%51%22%
Of which CfD (TWh) (6)3.2--
At an average achieved price (£ per MWh)49.248.649

Capital allocation and dividend

The Group remains committed to the capital allocation policy established in 2017, through which it aims to maintain a strong balance sheet; invest in the core business; pay a sustainable and growing dividend and return surplus capital beyond investment requirements to shareholders.

A final 2020 dividend of 10.3 pence per share was proposed in the 2020 results on 25 February 2021 and, subject to shareholder approval at today’s Annual General Meeting, will be paid on 14 May 2021.

An interim dividend of 6.8 pence per share was paid on 2 October 2020, making the total 2020 dividend 17.1 pence per share, an increase of 7.5% compared to 2019.

Enquiries:

Drax Investor Relations: Mark Strafford

+44 (0) 1757 612 491

Media:

Drax External Communications: Ali Lewis

+44 (0) 7712 670 888

Website: www.drax.com/northamerica

END

The world’s leading sustainable biomass generation and supply business

Today we completed a transformational deal – our acquisition of Canadian biomass pellet producer Pinnacle Renewable Energy.

I’m very excited about this important acquisition and welcoming our new colleagues to the Drax family – together we will build on what we have already achieved, having become the biggest decarbonisation project in Europe and the UK’s largest single site renewable power generator as a result of us using sustainable biomass instead of coal.

The deal positions Drax as the world’s leading sustainable biomass generation and supply business – making us a truly international business, trading biomass from North America to Europe and Asia. It also advances our strategy to increase our self supply, reduces our biomass production costs and creates a long-term future for sustainable biomass – a renewable energy source that the UN’s IPCC says will be needed to achieve global climate targets.

It’s also an important milestone in Drax’s ambition to become a carbon negative company by 2030 and play an important role in tackling the global climate crisis with our pioneering negative emissions technology BECCS.

That’s because increasing our annual production capacity of sustainable biomass while also reducing costs helps pave the way for our plans to use bioenergy with carbon capture and storage (BECCS) at Drax.

Negative emissions from BECCS are vital to address the global climate emergency while also providing the renewable electricity needed for a net zero economy, supporting jobs and clean growth in a post-Covid recovery.

Inside a Pinnacle pellet mill

Inside a Pinnacle pellet mill

We already know Pinnacle well – it is one of our key suppliers and the company is a natural fit with Drax.

Our new colleagues have a wealth of operational and commercial expertise so I’m looking forward to seeing what we can achieve together.

We will benefit from Pinnacle’s scale, operational efficiency and low-cost fibre sourcing, that includes a high proportion of sawmill residues. In 2019, Pinnacle’s production cost was 20% lower than Drax’s.

Completing this deal will increase our annual production capacity to 4.9 million tonnes of sustainable biomass pellets at 17 plants in locations across Western Canada and the US South – up from 1.6Mt now.

It also expands our access to three major North American fibre baskets and four export facilities, giving us a large and geographically diversified asset base, which enhances our sourcing flexibility and security of supply.

This positions us well to take advantage of the global growth opportunities for sustainable biomass. The market for biomass wood pellets for renewable generation in Europe and Asia is expected to grow in the current decade, principally driven by demand in Asia.

Biomass wood pellet storage dome, Drax Power Station

Biomass wood pellet storage dome, Drax Power Station

We believe that with increasingly ambitious global decarbonisation targets, the need for negative emissions and improved understanding of the role that sustainably sourced biomass can play, will result in continued robust demand.

Pinnacle is already a key supplier of wood pellets to other markets with C$6.7 billion of long-term contracts with high quality Asian and European customers, including Drax, and a significant volume contracted beyond 2027.

Drax aims to leverage Pinnacle’s trading capability across its expanded portfolio. We believe that the enlarged supply chain will provide greater opportunities to optimise the supply of biomass from its own assets and third-party suppliers.

The transport and shipping requirements of the enlarged company will provide further opportunities to optimise delivery logistics, helping to reduce distance, time, carbon footprint and cost.

Train transporting biomass wood pellets arriving at Drax Power Station

Importantly – there will also be opportunities to share best practice and drive sustainability standards higher across the group.

We recognise that the forest landscape in British Columbia and Alberta is different to the commercially managed forests in the south eastern US where we currently operate.

In line with our world leading responsible sourcing policy, Drax will work closely with environmental groups, Indigenous First Nation communities and other stakeholders and invest to deliver good environmental, social and climate outcomes in Pinnacle’s sourcing areas.

We are determined to create a long-term future for sustainable biomass and deliver BECCS –  the negative emissions technology that will be needed around the world to meet global climate targets. The acquisition of Pinnacle takes us a big step forward in achieving our goals.


Read press release: Drax completes acquisition of Pinnacle Renewable Energy Inc.


 

Completion of the acquisition of Pinnacle Renewable Energy Inc.

Pinnacle named ship

RNS Number : 2689V 
Drax Group plc
(“Drax” or the “Group”; Symbol:DRX)

Drax is pleased to announce that it has completed the acquisition of the entire issued share capital of Pinnacle Renewable Inc.

The Acquisition was originally announced on 8 February 2021.

Enquiries:

Drax Investor Relations: Mark Strafford

+44 (0) 7730 763 949

Media:

Drax External Communications: Ali Lewis

+44 (0) 7712 670 888

 

Satisfaction / waiver of conditions in relation to the proposed acquisition of Pinnacle Renewable Energy Inc.

RNS Number : 6420U
Drax Group plc
(“Drax” or the “Group”; Symbol:DRX)

On 8 February 2021, Drax announced that it had entered into an agreement to acquire the entire issued share capital of Pinnacle Renewable Energy Inc. (the “Acquisition”). On 31 March 2021, Drax announced that the Acquisition had been approved by Drax Shareholders at the General Meeting and Pinnacle announced that the Acquisition had been approved by Pinnacle Shareholders.

Drax is pleased to announce that on 6 April 2021 the Supreme Court of British Columbia granted the Final Order. All of the conditions to the Completion of the Acquisition have now been satisfied or waived (other than conditions which can only be satisfied at Completion) and Completion is expected to occur on 13 April 2021.

Capitalised terms used but not defined in this announcement have the meanings given to them in the Circular.

Enquiries:

Drax Investor Relations: Mark Strafford

+44 (0) 7730 763 949

Media:

Drax External Communications: Ali Lewis

+44 (0) 7712 670 888

Results of General Meeting

RNS Number : 1936U
Drax Group plc
(“Drax” or the “Group”; Symbol:DRX)

Drax is pleased to announce the results of its General Meeting held today, Wednesday 31 March 2021.

No.ResolutionVotes For%Votes Against%Votes Total (not including withheld)Votes Withheld
1.To approve the acquisition of the entire issued share capital of Pinnacle Renewable Energy Inc.318,727,66499.99%20,7440.01%318,748,40895,895

The resolution was passed.

Completion of the acquisition is expected to occur in April 2021, subject to the satisfaction or waiver of the final outstanding conditions.

The number of shares in issue is 411,732,605 (of which 13,841,295 are held in treasury. Treasury shares don’t carry voting rights).

Votes withheld are not a vote in law and have not been counted in the calculation of the votes for and against the resolution, the total votes validly cast or the calculation of the proportion of issued share capital voted.

A copy of the resolution is available for inspection in the Circular, which was previously submitted to the Financial Conduct Authority’s National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

The Circular and the voting results are also available on the Company’s website at www.drax.com/northamerica.

Capitalised terms used but not defined in this announcement have the meanings given to them in the Circular.

Enquiries:

Drax Investor Relations: Mark Strafford

+44 (0) 7730 763 949

Media:

Drax External Communications: Ali Lewis

+44 (0) 7712 670 888

At the heart of the energy transition

Tree nursery in Mississippi

Will Gardiner opened the second day of the Chatham House Energy Transitions conference. Watch his keynote address below or scroll down the page to read his speech in full.

The energy transition is central to our purpose of enabling a zero carbon, lower cost energy future.

Drax has been at the heart of Britain’s energy system for decades. And we have played a key role in the decarbonisation of the power sector: Drax Power Station in Selby, North Yorkshire, is the UK’s largest power station and Europe’s largest decarbonisation project. Cruachan, our Scottish Pumped Storage facility is a key complement to Britain’s ever increasing supply of offshore wind.

Our transition from coal to biomass has allowed us to reduce our greenhouse gas emissions by over 80% while providing clean and flexible energy to millions of homes and businesses across the UK. This month saw the end of commercial coal generation at Drax power station – a milestone in the history of our company and of the UK economy, too.

But the scale of the climate crisis means that we cannot stop here.

Which is why we have committed to a world-leading ambition to be carbon negative by 2030.

We will achieve this by making a transformational investment in bioenergy with CCS, or BECCS, which will enable us to permanently remove carbon emissions from the atmosphere while continuing to supply the renewable electricity that millions of British homes and businesses depend upon.

Water outlet into Loch Awe from Cruachan Power Station

Water outlet into Loch Awe from Cruachan Power Station

Today, we are pioneering BECCS at Drax Power Station as part of the Zero Carbon Humber Cluster, a coalition of diverse businesses with one ambition: to create the world’s first net zero emissions industrial cluster.

The benefits are enormous

BECCS is a vital technology in the fight against climate change. Expert bodies such as the Climate Change Committee here in the UK and the IPCC at a global level are clear that we need negative emissions technologies including BECCS to reach net zero, and BECCS is central to the UK and Europe’s decarbonisation plans.

As the world’s largest, and most experienced, generator and supplier of sustainable bioenergy there is no better place to pioneer BECCS than at Drax. The economic, social and environmental benefits are enormous.

BECCS at Drax will permanently remove millions of tonnes of carbon from the atmosphere and help heavy industry in the UK’s largest emitting area decarbonise quickly and cost effectively;

It will enable the creation of tens of thousands of green jobs in the North of England, levelling up the economy and delivering a green recovery from the Covid crisis;

And it will put the UK at the forefront of global efforts to develop carbon removal technology in this, the year that we host COP26 in Glasgow.

The scale of the climate crisis means that we cannot stop here.

A proven technology

We know that BECCS works and that the technology is available now. Looking at cost projections from the CCC, we also know that it is the best value negative emissions technology.

Engineer at BECCS pilot project within Drax Power Station

Engineer at BECCS pilot project within Drax Power Station

We have already successfully run two BECCS pilots at the power station. In 2019 we demonstrated that we can capture CO2 from a 100% biomass feedstock. And in 2020, we began a second pilot working with Mitsubishi Heavy Industries to further enhance the potential for delivering negative emissions.

We aim to deploy BECCS at scale by 2027. To that end, earlier this month, we kickstarted the planning process for our proposals to build our first BECCS units, marking a major milestone in the project and putting us in a position to commence building BECCS as soon as 2024.

The support we need

Drax Power Station has a proud history of transformation. And today we are making rapid progress in further decarbonising our operations and making bold commitments about our future.

The core of our successful decarbonisation has been a close partnership with government. And it is this partnership that will make BECCS a reality and enable the multiple benefits that come with it. An effective negative emissions policy and regulatory framework from government will enable further investments from companies such as Drax.

We believe it is possible for such a policy framework to emerge in the coming months.

With COP26 later this year, making that policy commitment will allow us to accelerate our own decarbonisation journey and support the industries of the future here in the UK.

BECCS in context

But we know that there is no silver bullet solution to tackling climate change.

Negative emissions technologies such as BECCS will be needed alongside others, for example more renewables, electric vehicles, energy storage, energy efficiency and hydrogen.

BECCS will enable us to permanently remove carbon emissions from the atmosphere while continuing to supply the renewable electricity that millions of British homes and businesses depend upon.

BECCS complements – and does not – and should not – substitute for ambitious decarbonisation plans. Technologies such as BECCS have a clear and unique role to play by helping harder to abate sectors such as heavy industry, aviation and agriculture – decarbonise.

This is critically important if we are to meet our legally binding 2050 net zero target. The CCC estimates that 51m tonnes of CO2 will need to be captured via BECCS to meet net zero.

Sustainability at our core

We know that BECCS can only make a meaningful contribution to tackling climate change if the bioenergy is sustainably sourced. This has been fundamental to Drax’s transition from coal to biomass, and it remains fundamental as we progress our plans for BECCS.

Infographic showing how BECCS removes carbon from the atmosphere

Biomass, as the UK Government has stated, is one of our most valuable tools for reaching net zero emissions. So we need the right framework to ensure it is sourced sustainably.

As the world’s largest bioenergy producer and generator, we recognise our responsibility to be the world leaders in sustainability, too.

At Drax, we have invested in world leading policies, tools and expertise to ensure that our biomass is sustainably sourced. We go beyond regulatory compliance and have set up an Independent Advisory Board, Chaired by the UK Government’s former Chief Scientific Advisor, to help us and challenge us on sustainable biomass and its role in Drax’s transition to net zero.

front cover of 'Responsible sourcing' PDF

[click to read]

Thanks to our independent catchment area analyses, we know more about the forests we source from than ever before. We know and can demonstrate how demand for biomass can support healthy forests. For example, in the South East US where Drax sources most of its biomass, there is more than double the carbon stored in forests than there was 50 years ago.

A partnership with our stakeholders

The purpose of today’s session is to discuss all these issues and more. Our aim is clear: to enable a successful energy transition.

At Drax we stand ready to invest hundreds of millions of pounds to scale up BECCS technology;

To put the UK at the forefront of global efforts to reach net zero emissions;

And to help create tens of thousands of green jobs in the North of England.

But I want your help in making BECCS as sustainable and successful as it can be.

We know and can demonstrate how demand for biomass can support healthy forests.

Thank you very much for listening and I wish you a good and constructive session tackling this critical global challenge.

Will Gardiner delivered this keynote address at Energy Transitions 2021.

The video of Will’s speech can be watched in full here and with subtitles here.

Attracting investment in emerging low carbon technologies

Biomass dome at Drax Power Station

Hello everyone. My name is Will Gardiner and I am the CEO of the Drax Group. It is great to have the opportunity to speak to you today at the Utility Week Investor Summit and to discuss attracting investment in emerging low carbon technologies.

Drax at the heart of the energy transition

My company Drax has been at the heart of Britain’s energy system for decades. And we have played a key role in the decarbonisation of the power sector: Drax Power Station in Selby, North Yorkshire, is the UK’s largest power station and Europe’s largest decarbonisation project. Cruachan, our Scottish Pumped Storage facility, is a key complement to Britain’s ever-increasing supply of offshore wind.

Our transition from coal to biomass has allowed us to reduce our greenhouse gas emissions by over 80% while providing clean and flexible energy to millions of homes and businesses across the UK.  This month saw the end of commercial coal generation at Drax power station – a milestone in the history of our company and of the UK economy, too.

But the drive to create a more sustainable, net zero economy means that we cannot stop here.

Which is why at Drax we have committed to a world-leading ambition to be carbon negative by 2030.

Engineer in the workshop at Drax Power Station

Engineer in the workshop at Drax Power Station

We will achieve this by increasing our capacity to generate renewable electricity, and by making a transformational investment in bioenergy with CCS, or BECCS, which will enable us to permanently remove carbon emissions from the atmosphere.

We are pioneering BECCS at Drax Power Station as part of the Zero Carbon Humber cluster, a coalition of diverse businesses with the same ambition: to create the world’s first net zero emissions industrial cluster.

I am delighted to confirm today that the Zero Carbon Humber Cluster project has received more than £21m in funding from the Government’s Industrial Strategy Challenge Fund to help accelerate our plans and to help transform our vision of a zero carbon industrial cluster into a reality.

The benefits are enormous

BECCS is a vital technology in the fight against climate change. Expert bodies such as the Climate Change Committee here in the UK and the IPCC at a global level are clear that we need negative emissions technologies including BECCS to reach net zero. And BECCS is central to the UK government and Europe’s decarbonisation plans.

As the world’s largest, and most experienced, generator and supplier of sustainable bioenergy there is no better place to pioneer BECCS than at Drax.  The economic, social and environmental benefits are enormous.

BECCS at Drax will permanently remove millions of tonnes of carbon from the atmosphere and help heavy industry in the UK’s largest emitting area decarbonise quickly and cost effectively;

It will enable the creation of tens of thousands of green jobs in the North of England, levelling up the economy and delivering a green recovery from the Covid crisis;

And it will put the UK at the forefront of global efforts to develop carbon removal technology in this, the year that we host COP26 in Glasgow.

A proven technology

We know that BECCS works and that the technology is available now. Looking at cost projections from the CCC, we also know that it is the best value negative emissions technology.

We have already successfully run two BECCS pilots at the power station. In 2019 we demonstrated that we can capture CO2 from a 100% biomass feedstock. And in 2020, we began a second pilot working with Mitsubishi Heavy Industries to further enhance the potential for delivering negative emissions.

We aim to deploy BECCS at scale by 2027. To that end, earlier this month, we kickstarted the planning process for our proposals to build our first BECCS unit, marking a major milestone in the project and putting us in a position to commence building BECCS as soon as 2024.

A partnership between industry and government

Successful decarbonisation has always been a partnership between industry and government.

This is evident looking at the incredible rise of Britain’s offshore wind sector. As a direct response to government’s political commitment, a strong price signal, and an investable Contract for Difference mechanism, offshore wind capacity has grown from 1GW to over 10GW in a decade. And build costs are now two thirds lower than what they were 10 years ago.

Pylon that takes excess wind power to be stored at Cruachan pumped hydro storage power station in Scotland

Pylon that takes excess wind power to be stored at Cruachan pumped hydro storage power station in Scotland

At Drax, our conversion from coal to biomass was benefited from much the same framework:

  • The UK Government was – and continues to be – very strong in its support for biomass as a renewable technology to replace coal;
  • Our CfD mechanism has given investors the certainty they need to invest;
  • And successive government’s commitment to a carbon price that matches or exceeds that of our European neighbours has told the market that Britain is serious about decarbonising the power sector rapidly.

That combination of factors – a clear, transparent, investable framework for renewables, combined with a strong price signal from the UK government discouraging fossil fuel power generation – has been the key to driving private sector investment in renewable power technology in the UK. As a result, the UK leads the world in decarbonising its electricity sector, while also enabling a global technology revolution in offshore wind power. Importantly, the whole effort has been underpinned by transparency, competition and confidence in the regulatory and legal framework, all of which are critical.

Building a partnership for the future

By continuing this partnership between industry and government, the UK could become the world leader in emerging green technologies such as BECCS.

Right now, markets and regulatory frameworks for BECCS or negative emissions more broadly either don’t exist – or aren’t flexible enough – to support the scaling of the technologies we need to get to net zero. But the first-generation framework, as I have just described, provides a great model.

Fundamentally, we believe that we can do BECCS at a cost of less than £100/t of CO2, which is less than any other negative emissions technology available.

We know this investment will help the UK reach net zero at a lower cost than it otherwise could do.

Maintenance inside a water cooling tower at Drax Power Station

Maintenance inside a water cooling tower at Drax Power Station

But although we’re ready to make the investment – the UK’s regulatory system isn’t yet ready to support it.

Despite being world leaders in these areas, our carbon pricing system and financial markets don’t yet recognise the value of negative emissions, even though our political institutions and scientists say they are vital to tackling climate change.

There is no government defined business model for BECCS, which will be essential to signalling long term political support as well as operational support.

And despite being the best placed country in the world to develop BECCS, we risk losing out as other countries race to deploy this technology first. Just last week we saw Aker, Microsoft and Orsted sign a memorandum of understanding to develop BECCS in Denmark.

However, in its ten-point plan, the UK government has committed to outline what role biomass and BECCS will play in the UK’s transition to net zero by the end of this year. Soon it will be consulting on a new bioenergy strategy. And it has already taken evidence on Greenhouse Gas Removal technologies and consulted on CCS clusters.

This, we believe, demonstrates that a set of policies could emerge in the coming months that will support investment in BECCS.

At their core, we think these policies should capture the stability and investability of a CfD for the renewable power that we will produce, as well as deliver payment for the negative emissions. By compensating negative emissions with a credit for every ton of CO2 they remove from the environment, the government can properly reward those technologies, and add a critical new set of tools to the fight against climate change – ultimately lower the cost of winning that battle.

This would enable Drax to invest in BECCS, begin delivering negative emissions and helping to decarbonise the North of England as soon as 2027.

With COP26 later this year, making this policy commitment will allow us to accelerate our own decarbonisation journey and support the industries of the future develop here in the UK.

BECCS in context

We know that there is no silver bullet solution to tackling climate change.

Negative emissions technologies such as BECCS will be needed alongside others, for example more renewables, electric vehicles, energy storage, energy efficiency and hydrogen.

Drax employee charging an electric car at Haven Power in Ipswich

Drax employee charging an electric car at Haven Power in Ipswich

BECCS complements – and does not – and should not – substitute for ambitious decarbonisation plans. Technologies such as BECCS have a clear and unique role to play by helping harder to abate sectors such as heavy industry, aviation and agriculture – decarbonise.

This is critically important if we are to meet our legally binding 2050 net zero target. The CCC estimates that 51m tonnes of CO2 will need to be captured via BECCS to meet net zero.

Sustainability at our core

We know that BECCS can only make a meaningful contribution to tackling climate change if the bioenergy is sustainably sourced. This has been fundamental to Drax’s transition from coal to biomass, and it remains fundamental as we progress our plans for BECCS.

Wood residues at Morehouse Bioenergy, Louisiana

Sustainably sourced wood residues at Morehouse Bioenergy pellet plant in Louisiana

Biomass, as the UK Government has stated, is one of our most valuable tools for reaching net zero emissions. So we need the right framework to ensure it is sourced sustainably.

As the world’s largest bioenergy producer and generator, we recognise our responsibility to be the world leaders in sustainability, too.

At Drax, we have invested in world leading policies, tools and expertise to ensure that our biomass is sustainably sourced. We go beyond regulatory compliance and have set up an Independent Advisory Board, Chaired by the UK Government’s former Chief Scientific Advisor, to help us and challenge us on sustainable biomass and its role in Drax’s transition to net zero.

Thanks to our independent catchment area analyses, we know more about the forests we source from than ever before. We know and can demonstrate how demand for biomass can support healthy forests. For example, in the South East US where Drax sources most of its biomass, there is more than double the carbon stored in forests than there was 50 years ago.

Ready to deliver

BECCS will be a critical green technology. And with the right support and policy framework we could be pioneers in making it a reality.

There is no better place to deliver BECCS than at Drax, and no better time to deliver it than now.

At Drax, we stand ready to invest hundreds of millions of pounds to scale up BECCS technology;

To put the UK at the forefront of global efforts to reach net zero emissions;

And to help create tens of thousands of green jobs in the North of England.

Thank you very much for listening.

Will Gardiner delivered this keynote address at the Utility Week Investor Summit

The science behind measuring and analysing trees

Weyerhaeuser working forest in Amite catchment area

We have published independent Catchment Area Analysis (CAA) reports for around 68% of the total biomass wood pellet supply to Drax Power Station in 2019. Within that, 73% of the pellets were manufactured in the US South accounting for 49% of that year’s total supply quantity.

A key component of CAA analysis are measurements, data and calculations provided by the National Forest Inventory (NFI). Bespoke wood price data, mill production capacity, market trends and interviews with local experts complete the picture.

The NFI in each country or region can be quite different in its intensity and frequency of measurement and overall degree of accuracy. In this article we examine the Forest Inventory and Analysis (FIA) database produced by the US Department of Agriculture Forest Service (USDA FS).

FIA traces its origin back to the McSweeney – McNary Forest Research Act of 1928 and began the first inventory in 1930. Since that time, it has been in continuous operation with a stated mission to: make and keep current a comprehensive inventory and analysis of the present and prospective conditions of and requirements for the renewable resources of the forest and rangelands of the US.

The fundamental science behind measuring tree height and diameter to calculate growth and volume has not changed much over the decades. A girth tape is used to measure the diameter at breast height (DBH), which is a point on the tree stem 1.37m above the base of the tree or the root collar (the exact height can vary by country). The height of a standing tree is conventionally measured using a clinometer or hypsometer, which measures the angle from the top of the tree to a measured distance away from the base. This forms a triangle from which the tree height can be calculated.

Example of girth and height measurement in the US South

The combination of height and girth are then used to estimate total tree volume based on historical models for that particular species in that country or region. Many decades worth of data measurements and modelling have been used to develop complex equations to estimate volume for each species and circumstance. This calculation process needs to estimate the rate of taper of the stem, or the difference in diameter between the base and the top of the tree. This can be consistent within a single species, but it can depend on growth rates and planting density (for example closely stocked trees may grow taller and thinner but more openly planted trees tend to be shorter and wider). Whether the site has been thinned, how many times, and at what age, can impact the degree of taper in the stem. Through many years of research, measuring and modelling the Southern Research Station (SRS) FIA team has developed the following formula for under-bark volume calculation:

under-bark volume calculation

This is then modified according to the parameters shown below, depending on species and stem characteristics.

Example of volume

Example of volume

Once the volume has been calculated, the basic density (solid wood per cubic metre) and moisture content can be used to calculate wet and dry weight, fibre content and yield.

A comprehensive record of data

The US Forest Service has built up an extensive historical record of data points through years of physical measurements – from both sampling and cutting down individual sample trees to determine the actual dimensions and statistics to compare against the estimated values. Over time, forest scientists are able to build up reasonably accurate tables for each tree species that can be used to estimate growth and volume based on the DBH and estimated tree height.

In the UK we have a forester’s handbook known as The Blue Book which contains a vast quantity of modelled data to help a forester calculate volume and growth in a range of different forest types across the country. This data has been collected and modelled by the Forestry Commission’s Forest Research branch. In the US they have a similar system of data collection and modelling but on a bigger scale, given the much larger forest area and greater variety in tree species and site type.

How can you measure an entire forest?

The forestland area of the US South covers more than 100 million hectares (ha) in total which can present quite a challenge to measure, survey and accurately predict forest growth and health. The FIA does this through a network of sample plots randomly but sequentially distributed across the forestland in each State with undisclosed locations so as to avoid biased management. Field crews collect data on forest type, site attributes, tree species, tree size, and overall tree condition on accessible forest land.

Recently, the programme has involved a five-year rolling measurement system where 20% of the plots are measured in each State, on an annual basis. At the end of a five-year period all plots will have been measured and the process begins again. This process is overseen by a robust quality assurance system to maintain and ensure the quality and accuracy of the fieldwork.

Plots are distributed at a rate of 1 plot per 6,000 acres of land (or one per 2,400 ha). This degree of plot distribution is at an extremely course scale if attempting to understand the growth of an individual stand or forest area. For example, The Blue Book recommends using 8-12 plots (and top height measurements) for a relatively uniform stand of around 10 ha. This degree of accuracy would be required to calculate the volume of standing wood for sale. In comparison, the FIA data would be completely inaccurate if trying to monitor growth and trends at an individual forest level or even at county level. This sampling intensity and the scale of measurement are the most critical factors in assessing the validity of data and trends that are identified through the FIA and through the CAA analysis.

Quantifying the level of accuracy

The physical measurement procedure and volume modelling are well established processes with data and analysis collected over many decades to support the findings; this leads to a clearly quantifiable degree of error for each measured plot. The challenge comes when using plot data to estimate the values in the surrounding forest. At this scale, the level of accuracy will depend on the ratio of plots to total forest area and the total number of plots measured. The ratio of plots per ha in the US South is pre-determined, limited by the physical and financial constraints of actually measuring trees on the ground. However, the total number of plots used to evaluate trends can vary according to how large an area is assessed.

Fundamentally, if a single county is assessed then the total number of sample plots will be low and the potential for error will be high. If an entire State is assessed, then the number of plots is much larger (despite the same ratio of plots per ha) therefore the data and the trend is statistically much more accurate. Drax’s CAA analysis falls somewhere in between these two points, with each catchment area including multiple counties but not quite at the same scale as State level analysis. An example of the variation in error is shown in the table below.

Degree of error for key metrics in Drax’s CAA analysis

Degree of error for key metrics in Drax’s CAA analysis

The data showing total inventory (volume of wood growing in the forest) has been assessed for the Chesapeake catchment area in North Carolina and Virginia. When looking at each individual county, the data error calculation is +/- 46.5%, therefore not very accurate. If looking at State level, the data error is only +/- 2.7%. This degree of error is much more accurate and demonstrates more credible and reliable data due to the much larger number of plots available across the entire State. The Drax CAA analysis for inventory in the Chesapeake area is +/- 4.7% which is reasonably close to the State level accuracy due to the large number of countries that are included in the CAA analysis.

Since the catchment area boundary is defined by the pellet mill’s historical and future sourcing pattern, this can vary in size according to each mill’s procurement strategy and local market conditions. For example, the Amite BioEnergy pellet plant sources from a much smaller area close to the mill and therefore the catchment area includes fewer counties. This can lead to a higher degree of error than in the other CAA reports as the total number of plots used is smaller.

A long history of measurement and analysis

Despite this, the overall degree of error is still in single figures and can be considered reasonable in each CAA report by the standards of forest measurement and modelling, an error of under 10% is generally considered acceptable. Measuring standing trees that are still growing is not an exact science – it is an estimation. Trees cannot be accurately weighed or measured until they are cut down. Therefore, there will always be degree of error in estimated data. In the US South, the long history of measurement, analysis and data modelling and the relatively homogenous nature of the main commercial species (southern yellow pine), mean that the error is relatively uniform and predictable if a large sample area is considered.

The potential for remote sensing data collection and analysis to replace traditional field measurement is an interesting and developing field. At an individual forest or stand level, it is possible to carry out intensive measurement with Laser or Lidar, to calculate volume and growth. However, there is currently no reliable, accurate and cost-effective way to do this at a large-scale across several million hectares. This may be a possibility as the technology and data interpretation tools continue to develop and Drax is working closely with remote sensing specialists to trial and develop this process. Until then, we can rely on boots on the ground and traditional fieldwork for an accurate view of the forest trends across our supply chain.

This blog supports a series of catchment area analyses around the forest biomass pellet plants supplying Drax Power Station with renewable fuel. Read more.