Drax Group Plc got a 75 million pound ($115 million) loan from insurer Friends Life to convert the largest U.K. coal-fired power station to burn biomass.
The amortizing loan maturing in June 2018 is backed by the state Infrastructure U.K. Guarantee Scheme, Selby-based Drax said today in an e-mailed statement. The financing replaces half of a 100 million-pound loan from the U.K. Green Investment Bank, with funds raised for the project totaling 815 million pounds.
Drax plans to invest as much as $1 billion to turn itself into a predominantly biomass-burning power generator, initially switching three of its six units to burn wood pellets in the next three to four years. RWE AG in Germany and Dong Energy A/S of the Netherlands are also switching to burning renewable fuels as they seek to meet European Union air-pollution standards.
The U.K. estimates bioenergy plants that use wood chips and organic waste to produce heat and power may meet as much as 11 percent of the nation’s primary energy demand in eight years.