Drax Group to enter process for the acquisition of US pellet plants

Drax Group, the North Yorkshire energy provider, is participating in separate processes for the acquisition out of bankruptcy of the operating assets of Texas Pellets and Louisiana Pellets.

Drax, which operates the largest power station in the UK, has submitted initial cash bids for these assets as part of an auction process, which will be held on 1st and 2nd March 2017.

The power station is now a predominantly renewable power generator, having converted three of its generating units to only use sustainable biomass, which has resulted in carbon savings of more than 80% compared to coal and the creation of a completely new supply industry.

The company has built two pellet plants in the southern US – Mississippi and Louisiana. These are now fully operational and deliver biomass pellets to Drax via the port at Baton Rouge. Shipments come to the Port of Tyne on the north east coast, ports at Hull and Immingham on the Humber estuary and since October 2015 from Port of Liverpool.

As a result, Drax has saved over 20 million tonnes of carbon since it began using sustainable biomass, and currently powers 3 million UK homes with renewable electricity.

Whilst these are binding bids, and could be accepted by the sellers, it is expected that the successful buyer will be determined through auctions.

Drax has previously indicated its intention to expand its self-supply compressed wood pellet operations to support 20-30% of its generation requirement.

Subject to a disciplined approach to pricing in the auctions, the acquisition of these assets would help Drax meet this target.

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