Vitality large Drax is being investigated by Britain’s monetary watchdog about the place it will get the wooden from that it burns to create electrical energy.
It follows accusations by a former Drax insider in March that the corporate had misled over its sourcing of wooden for biomass pellets.
The London-listed firm denied these claims. It mentioned it could “co-operate with the FCA as part of their investigation” on Thursday.
Drax, which used to burn coal at its Yorkshire energy station, now receives multimillion-pound subsidies from vitality bill-payers to burn woody biomass pellets.
The UK authorities supported this change as a approach to clear up energy provides, and classed the ensuing bioenergy as renewable.
However that standing and the big subsidies have been disputed by campaigners and a few scientists who concern bioenergy is much less inexperienced than thought, primarily based on its influence on forests and the years wanted for its emissions to be offset.
However the station supplies 5% of Britain’s electrical energy and has the benefit of being extremely versatile: it could simply be turned up, down or off to match demand, a feat that eludes wind, photo voltaic and nuclear energy.
Shares within the FTSE 250 agency fell greater than 12% on Thursday morning.
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The group mentioned the Monetary Conduct Authority (FCA) probe covers its biomass sourcing statements from January 2022 to March 2024.
It would additionally assess the compliance of Drax’s annual reviews from 2021-2023 with monetary disclosure and transparency guidelines.
The regulator mentioned: “We can confirm that the FCA has opened an investigation into Drax Group.”
Its probe intensifies scrutiny over Drax, which final yr paid a £25m penalty for misreporting knowledge on wooden from Canada.
Then, in March 2025, Drax’s former head of public affairs and coverage, Rowaa Ahmar, instructed the corporate had misled over its sourcing of wooden for biomass pellets, which have been made as a part of a declare for unfair dismissal at an employment tribunal. Drax denied the claims.
The 2 rapidly reached a settlement.
Weeks earlier, the federal government confirmed it could lengthen subsidies for Drax’s “important” bioenergy, however halve the quantity paid and embrace a windfall mechanism to recoup a number of the income.
Calum Andrews, UK energy analyst for S&P International, mentioned the present subsidy preparations “incentivise the plant to run at high capacity for most of the year”.
However the modifications from 2027 ought to trigger a “significant cut in output (and therefore biomass burning) from the plant, with generation focused on times when the power grid needs it most, e.g. when wind generation is low”.
Frankie Mayo, vitality analyst at thinktank Ember, mentioned it is “right that the UK’s largest emitter faces additional scrutiny”, given its value, environmental influence and dependence on wooden product imports.
