In an interview with James Quinn, Drax chief executive Dorothy Thompson explains why the times are a-changing at the UK’s largest electricity power station
Dorothy Thompson is a woman on a mission. A mission to convince the world that burning wood can create energy more efficiently and more effectively than other methods.
Given that this was the way that fire was first discovered up to 2m years ago, or thereabouts, it shouldn’t be that much of a problem.
But given that Thompson is talking about wood in the form of biomass – basically all the fibre, grass and other unwanted detritus one finds on the floor of a forest – it is. Or it certainly was.
The first lady of the British energy firmament – she is the only female chief executive in the sector – Thompson has spent the past nine years trying to prove that Drax, western Europe’s largest power station, which provides 7pc of the UK’s electricity, can run on biomass.
“Burning trees is fairly old. Burning trees for electricity somehow in people’s minds seems different,” she smiles.
“What we need to explain better is firstly we only burn trees from forests that are continuously grown. And it’s kind of obvious … why would I burn trees from a forest that’s being depleted? I wouldn’t have a business after a while.
“And the second is that we do burn forest fibre – we don’t really burn trees – and we transport it from a long distance. We have to show that the energy used in that process is small.”
Critics of Drax – which has converted three of six generating units at its sprawling plant on the River Ouse, just outside Selby, North Yorkshire, to run on biomass and is in the process of planning to convert a fourth – question its environmental credentials.
Thompson is quick with the answers. Drax delivers at least an 80pc energy saving relative to coal transport, she assures, pointing out that it imports its biomass material mainly from the south east of the US, as well as Canada, the Baltics, southern Europe and a limited amount from the UK, compared with Latin America and Russia for its coal.
Drax was – and remains – the newest coal-fired power station in the UK when it was built by the Central Electricity Generating Board in 1974.
When Thompson took the helm in October 2005, the company was saddled with debt, and controlled by banks that had been saddled with the debt.
In her first 12 months she worked to halve the debt, float the company on the London Stock Exchange and set out a new course. “What was very clear when we took breath was the big problem facing Drax and the UK was the level of carbon emission from coal stations.
“By virtue of being the largest coal station in western Europe, as a site we were the largest carbon emitter in the UK. At the time we also had a rather violent protest against carbon [at our plant], and that made us think, and our strategy probably anticipated that.
“We thought … we have to do something about our carbon emissions.”
A two-pronged plan was hatched: upgrade the existing plant to make it more efficient, and burn something different. Biomass was the answer.
“At the time we took what felt was a very brave decision. We built this facility so we could burn 15pc biomass across the whole station. To think we deliver 7pc of the UK’s power, to suddenly go to 15pc biomass, which hadn’t really been done anywhere else. At a personal level, some of my team did think I was a little crazy.”
But the trial was a success, and the plant moved to one unit, to two, to three. “When we first said we were going to burn biomass in our units, people said, ‘you’re going to have a massive drop in capacity and a significant drop in efficiency, why would you do this?’ But actually we’re delivering very good performance now,” she confesses.
But with its shares some 29pc off March highs above 800p – closing on Monday night at 584p – it would be fair to say not all investors recognise that performance.
Part of the fall came after shareholders reacted to an adverse legal decision in August, when Drax lost a legal tussle with the Government over whether one of its plants was eligible for a subsidy contract. Drax will still convert the unit, using a less lucrative subsidy scheme.
Thompson won’t comment on the price fall – “it’s difficult for someone like to me comment on our share price” – but says she doesn’t think the legal decision is a change of heart from the Government on biomass policy, rather budgetary realities. “I think what you’re seeing between biomass, wind and other technologies is the Government working out how you fit that into budget control.”
So biomass hasn’t fallen out of favour in the renewables mix? “I would say that’s not the case. And I say it with confidence as we meet regularly both with the political side and with the officials. What I would say is that Government took time to understand … the complications.”
She says that she is in favour of the Government’s energy market reform, which has moved beyond seeing renewable energy as expensive, and is pleased that the UK is leading Europe in delivering low-cost renewables.
But she is not pleased with everything. So much so that Drax commissioned think tank Frontier Economics to produce a report comparing biomass power generation with wind. The report – published on Monday – shows that Drax’s existing biomass conversion units could deliver total savings to the UK of between £2.5bn and £3.4bn against the equivalent offshore wind generation. “I think the Government is using biomass as a transitional technology. We hope that will change, and it will be a longer transition. Biomass is supported through to 2027, but not at present thereafter.”
It is Thompson’s job to educate to make that change a reality. “We’ve always said it is a good complement to wind, and it’s very obvious why it’s a complement as we’re reliable and flexible, whereas wind is intermittent.
“It’s not so obvious that part of the reason it’s a complement is that it lowers the total cost.”
If she can convince whoever occupies the Government from next May onwards of that, then she will have succeeded in transforming Britain’s biggest carbon emitter into a truly revolutionary and renewable site.