Drax shares plunge on proposed plans to change biomass schemes

12th Dec 2014 12:27

Energy firm Drax shares plunged after the Department for Energy and Climate Change (DECC) announced planned changes to one of its subsidy schemes for biomass plants.In a report published on Friday, DECC said it intends to change the subsidy system because more biomass generation was being developed than it originally planned and to ensure enough cash is left to help support different kinds of low-carbon power generation.The British government is aiming to change its approach to renewable energy projects by replacing direct subsidies with a contracts-for-difference (CfD) set-up, which would see qualifying projects guaranteed a minimum price at which they can sell electricity.DECC added that it would no longer guarantee the subsidies offered under its Renewable Obligation programme to biomass conversion projects.Drax shares tumbled to their lowest level in over two years, losing 10.19% to 507.00p at 12:53 on Friday.