Biomass subsidy cut “moves the UK one step closer to a phase out”

The UK government recently announced the heads of terms of a new subsidy for large-scale biomass generation at Drax Power Station from 2027-31.
From April 2027, the new subsidy package should see subsidies fall to around £1.2 million per day, with generation falling by 55% to provide just 1.8% of UK electricity supply in 2030.
Emissions will fall to around 5.8 MtCO2e annually, though Drax will remain the UK’s largest emitting power station.
Drax currently receives subsidies worth on average £2 million per day, generating around 4% of the UK’s annual electricity demand from wood pellets that are almost entirely imported from overseas.
Generation and pellet imports are now set to be cut, meaning that the UK is less exposed to fuel price fluctuations in volatile global markets.
From 2027 onwards, further restrictions on earnings will also be implemented.
Drax must generate at a minimum capacity factor of 22% even during an energy price spike, and an ‘excess-profits’ windfall levy mechanism will be introduced.
According to Ember, the UK has the opportunity now to further cut the imports, subsidies and emissions associated with biomass power by delivering Clean Power 2030 and planning for a streamlined strategic reserve.
Homegrown wind and solar accompanied by energy storage systems reduce the near-term need for more polluting sources of reserve power, improving the UK’s energy resilience and export potential, it claimed.
It added that the UK government can contribute towards the phaseout through a successful upcoming Contracts for Difference auction and securing alternative forms of flexible and dispatchable energy, before committing to any unabated biomass or bioenergy with carbon capture and storage projects in the 2030s.
"The biomass wind-down will start saving consumers money and at the same time cut imports. The challenge now is to build the modern efficient power system which can leave behind biomass power completely," said Frankie Mayo, senior energy & climate analyst - UK at Ember.