Skip to content
Subscriber Only

Drax's Coal-to-Biomass U.K. Conversion Aid Faces EU Probe

  • EU cites concerns that plant operator may be overcompensated
  • Huge demand for wood pellets may distort market, EU says
Updated on

Drax Group Plc fell to the lowest in almost three weeks after the European Union said it will investigate the U.K.’s plans to support conversion of a coal-powered unit to biomass amid concerns that the aid may overcompensate the company.

The probe will focus on U.K. estimates for the Drax plant’s economic performance, which “may be too conservative” and allow the unit to make more money than envisaged, undermining its need for government help, the European Commission said. It will also examine whether the plant’s demand for some 2.4 million metric tons of wood pellets a year, mainly from South America and the U.S., would distort the market.