Drax delivers upbeat AGM despite power station setback

23rd Apr 2014 13:40

Shares in FTSE 250 renewable energy provider Drax lost more than 10 per cent of their value on Wednesday morning, hit by the group's announcement that one of its power stations was no longer deemed eligible by the UK government for an investment contract.At the group's annual general meeting (AGM) later in the day, the group told investors it did not understand the basis for the decision, "as nothing has changed as far as our plans are concerned" since the government initially pledged to grant investment for two power stations via a Contract for Difference."External legal advice confirms that we've a good case for challenging this decision in the courts," the group's Chairman Charles Berry said at the AGM, confirming that the group has commenced proceedings challenging the decision. He continued: "Whereas we're clearly disappointed with the news, as we firmly believe that the early contract for difference (CFD) provides a mechanism that will bring forward the delivery of substantial renewable power, we must now fully evaluate the options that are left open to us. One thing that we are certain of, however, is that our strategy to become a predominantly biomass-fuelled generator through converting initially three of our six generating units remain unchanged."Berry told investors that the group's commitment to becoming a leading provider of sustainable power "is stronger than ever". Last year the group converted its first generating unit at Drax Power Station in North Yorkshire to burn sustainable biomass in place of coal, and is now looking to increase sales of renewable power to business customers in the UK."No one has ever converted a power station like this before and there are no 'off-the-shelf' answers," said Berry. "What we have seen at Drax Power Station is without doubt a feat of engineering with safe and reliable operations hard-wired into every decision taken. We have delivered better performance than we initially thought possible and with further investment we can improve it further." As of 13:30, the group's share price had fallen 10.91% to 666p. NR