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Drax eyes two US pellet plants

UK power giant Drax Group is looking to buy two pellet plants in the US that have filed for bankruptcy.

The owner of the UK’s largest power plant said it has submitted initial cash offers for the operating assets of Texas Pellets and Louisiana Pellets as part of auction processes to be held on 1 and 2 March, 2017.

“Whilst these are binding bids, and could be accepted by the sellers, it is expected that the successful buyer will be determined through auctions,” Drax said in a statement

Drax said buying the assets would help it achieve plans to expand its self-supply compressed wood pellet operations to support 20-30% of its generation requirement.

The news follows a report last week that revealed the burning of wood for biomass power and heat could be more harmful than traditional energy sources. The Woody Biomass for Power and Heat Impacts on Global Climate report said while some instances of biomass energy use may result in lower life-cycle emissions than fossil fuels, in most circumstances this was not the case.

Earlier this month, Drax reported a 17% decline in 2016 underlying earnings (EBITDA) to £140 million, blaming challenging commodity markets and changes to climate change regulations. New regulations, which mean renewable energy that includes power from biomass, will no longer be exempt from the Climate Change Levy.