The NFU greatly regrets the recent announcement by Drax Power that, from 2017, it will discontinue the 'Green Shoots' programme of direct farmer contracts to supply miscanthus and straw to the UK's largest power station in North Yorkshire. Letters have been sent to more than contracted 70 miscanthus growers, inviting farmers to enter into a 'Novation Agreement', assigning their contracts to miscanthus specialists Terravesta, who have other end uses available. The NFU understands that the replacement terms and conditions are similar to or possibly better than the original agreements.
Drax Power is reviewing its biomass supply arrangements in the light of the currently uncertain political landscape, and the present differential in price between imported wood pellets and domestically grown feedstocks. At present Drax consumes around 6 million tonnes of imported woods pellets annually, plus about 200,000 tonnes of UK agricultural biomass. A spokesman from the power station said: "Drax can confirm that it will transfer all direct supply contracts that it has with miscanthus growers to Terravesta. This will take effect from the 2017 harvest. With the price of low grade wood significantly lower than miscanthus, Drax has decided it is no longer economically viable for it to use miscanthus to generate electricity.”
According to Rob Meadley at Brown & Co, land agents acting for the 'Green Shoots' programme: “Whilst Drax is moving away from UK biomass, there are still plenty of opportunities for direct biomass supply to large and small end users. The growers who have been directly supplying Drax will be transferring contracts to Terravesta who have other end markets and are continually exploring new opportunities. I believe with the right Government support there is still a good case for sustainable UK produced biomass to meet our electricity, heat and road fuel demands for the future.”
NFU Chief Adviser on Renewable Energy, Jonathan Scurlock, commented: "It is a great shame that Drax is turning its back on procurement of UK energy crops for fuel, and we believe that biomass power stations should be more specifically encouraged to use domestic feedstock as well as imported biomass. Clearly the current uncertainty over the Government's policy direction is denting investor confidence, with regrettable knock-on effects for NFU members."
However, Terravesta's Business Development Manager Alex Robinson is confident that growers entering into an agreement with his company, taking effect from the 2017 harvest, are in a strong position. "It is Terravesta’s mission to keep developing viable opportunities for farmers", he said, "and we are taking on more miscanthus growers to meet the uplift in demand, currently working with 220 farms on long term fixed price contracts with annual index-linked increases."
“Terravesta has a 12-year contract to supply Brigg Renewable Energy Power Plant with 25,000 tonnes of whole bales annually, and this year the price for a long term miscanthus supply contract is £74.57 per tonne, delivered to Brigg. In the future miscanthus hybrids grown from seed, rather than the traditional rhizome, will mean cheaper establishment costs, higher yields, better returns, more markets and ultimately an excellent long term future for the crop.”