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Drax: Biomass subsidies could save UK £2bn

UK consumers could save more than £2 billion (€2.56bn) if the country’s government’s planned renewable energy auctions are opened up to include a wider mix of technologies, a new report finds.

Drax, UK's largest power producer, commissioned NERA Economic Consulting and Imperial College to look at hidden costs that are not reflected in the contracts the UK government awards for renewable generation.

According to the report, these hidden costs, or whole system costs, are increasing as intermittent renewables – those reliant on the sun and wind - increase.

“Intermittent renewables like wind and solar are vital as we continue to clean up energy generation, but they need to be backed up by a constant supply of electricity that can be flexed up and down to make sure the UK’s businesses and households always have power on demand,” said Drax Group CEO Dorothy Thompson.

“Opening up energy auctions to include other renewables could save consumers £2 billion and with more biomass in the mix energy security is also boosted.”

The research shows significant differences in the true costs of renewables once the additional costs are recognised.

Offshore wind could require a CfD of £127 per MWh, onshore wind £92-97 per MWh, solar £96 per MWh, and biomass £84 per MWh, Drax says.

The study found that once the new support levels are modelled over the planned energy auctions, the new energy mix could save consumers £1.9 -£2.2 billion.

The UK government is currently planning three auctions for new renewable energy Contracts for Difference (CfDs) over the next four years, but all are focused on offshore wind.