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Drax sells UK-based wood pellet distribution business

Power giant Drax has agreed to sell its wood pellet distribution business, Billington Bioenergy (BBE), to Aggregated Micro Power Holdings, an AIM-listed energy company specialising in the sale of wood fuels and the developing of distributed energy assets.

Drax said the consideration for the transaction was £2m (€2.24m), comprised of £1.6m of shares in AMPH and £0.4m of cash. Drax said the sale was aligned with its retail strategy, focused on the  I&C and SME energy markets. 

However, through its shareholding in AMPH, Drax would retain an interest in the UK heating market, while gaining exposure to the development of small-scale distributed energy assets.

Chief executive Dorothy Thompson said: “We are pleased with the sale of BBE and our investment in AMPH. 

“With their leadership in the UK wood pellet heating market, we believe they are the right partner to take forward and grow BBE, whilst supporting the UK's transition to a low carbon economy." 'We look forward to working with AMPH.”

Teamwork 

The news comes as UK wood pellet specialist Forest Fuels announces that it will join forces with Billington Bioenergy under the ownership of AMP.

While the two brands will continue to operate independently, behind the scenes they will immediately combine their expertise and distribution resources.  This will enable them to offer unbeatable quality wood fuel supply across the whole of the UK.

Forest Fuels already enjoys a UK-wide distribution network, operating from its head-office in Okehampton and three regional offices across the UK. The combined businesses will have more than 4,000 customers,

“This is an exceptional development, not only for Forest Fuels but also for the wood fuel industry as a whole,” said Peter Solly, Forest Fuels managing director. “Customers from both companies will now have access to an even more comprehensive and efficient wood fuel supply chain.  We’ll have more local depots, additional numbers of specialised delivery vehicles, and an increased number of specialists on hand to deal with enquiries. We are delighted to welcome Billington’s 34 staff to the team.”

In a statement, Forest Fuels said: “Forest Fuels and Billington Bioenergy is an excellent ‘geographical fit’, which offers much-improved economies of scale. The locations of their depots mean delivery vehicles will now have fewer miles to travel to reach customers. 

Solly added: “Forest Fuels’ emphasis has always been on providing the highest quality of service to our customers, so it’s great to be combining with another company that has the same core values.  Billington has built a strong and very well-regarded business in the wood pellet market in England over the last ten years.

“Our strategy has always been to grow Forest Fuels into the leading wood fuel business in the UK, and this latest acquisition will enable us to realise this ambition.”

As well as supplying around 130,000 tonnes per year of wood pellet, Forest Fuels also supplies around 70,000 tonnes of woodchip.  Billington Bioenergy supplies around 40,000 tonnes of wood pellet.

Billington Bioenergy Managing Director Roger Pearson said: "This is wonderful news for Billington and for our customers.  Billington Bioenergy has always endeavored to provide and deliver the very highest-quality wood fuel for our customers – by joining forces with Forest Fuels we are in an even stronger position to do this.”





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