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Ember: Drax BECCS plant could cost £31.7bn in public subsidies

Image: Drax.

Image: Drax.

Drax’s proposed bioenergy with carbon capture and storage (BECCS) plant could cost £31.7 billion in public subsidies according to a new report from Ember.

This would be more expensive than EDF's Hinkley Point C nuclear plant, which has a Contracts for Difference (CfD) agreement with the government preventing the numerous rises in costs from filtering down to consumers, with the project consistently running into delays.

Ember has therefore called for Drax to publish its estimates for the subsidy requirements for BECCS, and warned that the government must “proceed cautiously” with support for BECCS until it is guaranteed that it will result in negative emissions- a key feature lauded by Drax and to be achieved through the sourcing of wood from well managed, growing forests.

However, while a selling point of particular importance, Ember pointed out that current regulations do not yet prevent unsustainable and high carbon biomass being burnt, such as trees from primary, highly biodiverse forests.

The thinktank has made a number of assumptions to come to the estimated costs of the plant, the first of which is that Drax is unlikely to be able to participate in an open Contracts for Difference (CfD) and is therefore likely to negotiate a strike price directly with the government in much the same way as nuclear.

Ember also referenced a previous study by energy consultancy Ricardo, which was commissioned by the Department for Business, Energy and Industrial Strategy (BEIS) and published August 2020. This gave a central cost estimate for BECCS in general of £181/MWh, and was the figure used by Ember to calculate the likely subsidy cost.

This is in comparison to nuclear power plant Hinkley Point C, which is being contracted at £106/MWh, while in 2019’s CfD auction offshore wind achieved prices as low as £39.65/MWh.

This research from Ricardo also assumed a BECCS plant would have a lifetime of 25 years, and as such Ember has assumed a 25 year CfD contract.

Additionally, in 2020 Drax’s four biomass units generated 14.1TWh of electricity, which was also being taken into account by Ember. The capture plant of a CCS project uses a significant amount of electricity, which Drax estimates will reduce usable capacity by ~25%, therefore Ember calculated this would leave 10.2TWh of usable BECCS generation upon which the CfD would be calculated. The thinktank then used this generation estimate to calculate total CfD subsidy due to Drax.

Ember’s analysis therefore revealed that the average of mid-range estimates for the total cost to the consumer of Drax’s BECCS plant is £31.7 billion, with costs ranging from £23.5 billion to £44.3 billion.

The thinktank also highlighted how biomass plants currently don't pay for their carbon emissions due to them being assumed to be inherently carbon neutral under the UK Emissions Trading System and the UK Carbon Price Support, something which it claimed is not supported either by "the weight of recent science" or by data provided by the power plant operators themselves.

Ember estimated the carbon tax break to Drax was £258 million in 2020, although it added that current sourcing rules for biomass allow for large range of possible carbon outcomes, creating uncertainty as to how high the tax break is with the potential for it to be up to £585 million.

“High price tags are sometimes necessary for innovative green technologies. But with biomass, there’s a real risk that the UK doesn’t get what it’s paying for," said Ember's COO and lead UK analyst, Phil MacDonald.

"We must be absolutely certain we’re not spending billions of pounds to accidentally increase our contribution to climate change."

A Drax spokesperson hit back at the claims in the report, stating that the calculations used are based on "a series of false assumptions that do not reflect our current proposals to deliver carbon negative power at Drax".

They pointed to how some of the figures relate to the building of a brand new BECCs power station as opposed to the retrofit scheme planned by Drax, as well as how Ember based its calculations on Drax developing CCS across all four of its biomass units, when current plans are only for two.

Additionally, the spokesperson made reference to the assumption of a 25 year CfD, when a 15 year contract length is currently being envisaged by the government for CCS projects. In its report, Ember did acknowledge this, stating its reason for assuming a 25 year length is that longer contracts are available and that it would be expected that BECCS plants, with a high capex and very high opex, may require a longer contract to turn a profit.

“By 2030, the introduction of BECCS on just two of Drax’s biomass units could capture around eight million tonnes of CO2 each year, equivalent to 40% of the Climate Change Committee’s 2050 net zero BECCS power target, and it is widely recognised that in order for the UK to reach its legally binding net zero target, negative emissions technologies like BECCS must be deployed," the Drax spokesperson said.

“BECCS at Drax will save the UK more than £4.5 billion over the coming decade, as well as removing millions of tonnes of CO2 from the atmosphere and supporting tens of thousands of jobs.”


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