Drax will not bid for capacity market contracts for its proposed new gas power plant in North Yorkshire until the outcome of a legal challenge against the project is known.
The National Grid uses capacity market contracts to ensure there will be sufficient energy on the grid to offset periods of stress caused by the UK’s increasing reliance on wind power, which can be unreliable.
Participants bid for these contracts four years ahead of delivery, with the next auction due in March. In a statement issued today, Drax said it “does not intend to take a capacity market agreement in the forthcoming auction”.
The energy company said that it would “now assess options for these assets, alongside discussions with National Grid, Ofgem and the UK Government”.
The uncertainty over the project’s future arose last week when environmental lawyers Clientearth launched a High Court challenge against business secretary Andrea Leadsom’s decision to approve Drax’s gas plant.
Clientearth is challenging Leadsom’s decision on the grounds that construction of the plant, which would be the largest in Europe, goes against the Planning Inspectorate’s (PI) recommendation that it should be blocked on climate change grounds.
In October the business secretary approved the project, which would see Drax replace its coal-powered plant in Selby with four gas turbines with 3.6 gigawatts of capacity.
In its recommendation, the PI said that Drax had “not made a convincing case for the need for more fossil fuel generating capacity”.
Citing the Department of Business, Energy, and Industrial Strategy’s (BEIS) own research, the PI said that whilst only 6 gigawatts of new gas generation was needed to ensure energy security before 2035, consent had already been given to the development of 15 gigawatts worth.
Although the UK will phase out coal power by 2025 at the latest, Drax have previously said that the likelihood of the plants running beyond 2023 is “extremely low”.
The FTSE 250 company is instead focused on transitioning into renewables and supply security services, and last week was one of five companies to be awarded a £328m contract by National Grid to help stabilise the electricity sector.
The companies will either build new assets or convert existing ones to supply inertia, a force that helps the grid run at the right frequency.
Existing assets to be used include Drax’s Cruachan pumped-storage hydroelectric power station in Argyll and Bute, Scotland.