As CEO of power generation business Drax, Dorothy Thompson ensures that around seven per cent of the UK’s electricity demand is met. She tells us why the future for the company is definitely looking green…
Passing through lush green fields dotted with cows and quaint cottages, Selby in North Yorkshire could be any other semi-rural British town. It’s only as an incongruous, brown-brick chimney, pumping steam, looms into view that it becomes clear how the surrounding trees act as nature’s own camouflage for the UK’s biggest power station. Welcome to Drax.
Headed by group chief executive Dorothy Thompson, Drax provides between seven and eight per cent of all of the country’s electricity. Drax Group has three principal activities: electricity production, electricity sales to business customers, and processing sustainable biomass (wooden pellets derived from sustainably managed forests) for use in electricity production.
Thompson has headed Drax for the last 10 years and has overseen its transformation from burning coal to power its huge generating units to sustainable biomass. This move has turned Drax from the UK’s biggest emitter of carbon dioxide into Europe’s largest decarbonisation project. Previously, Thompson worked for power company InterGen where she led the European business side of the company. This was preceded by a career in banking.
Global concerns over climate change, along with recent UK legislation on carbon emissions, have meant that the power generating business has become a new political, economical and environmental hot potato, an issue of which Thompson is fully aware. In 2015, Drax suffered a slump in share price, following the government announcement that from August 2015 levy exemption certificates (LECs) were to be abolished, removing a significant stream of income for Drax.
“The past year  has been a big one for the company,” Thompson concedes. “We decided to do something about carbon emissions to improve efficiency of the power generating units within the plant. This meant changing what they burn, and in our case, moving from carbon towards renewable biomass fuel. It has taken us between 10 and 12 years to get to this point, as previously there wasn’t much biomass product or knowledge available. Drax has developed an effective supply chain for biomass, but it has been a long process in the making.”
From tree to train
The efficiency of the supply and transport chain is evident around Drax, and the company commissioned, designed and developed the UK’s first biomass freight trains, which arrive at the plant throughout the day. The Drax biomass train wagons have a capacity of 116 cubic metres – 30 per cent more than any other UK wagons. At regular intervals, these trains pull into the power station to drop the biomass pellets matter through the tracks and onto a conveyor belt. The biomass is then sorted via a magnetic process to remove any ferrous material (which could cause fire) before being pulverised in advance of hitting the furnace. Drax first started burning biomass fuel 10 years ago, and Thompson is excited by the changes that have taken place since she joined the firm.
“We have six boilers at Drax – three of which run on sustainable biomass fuel. The first unit was successfully converted in April 2012 and the second in October 2014. The third runs predominantly on biomass and we expect it to be fully converted this year. If we are given the right support by the government, we hope to convert a fourth unit in the near future. It is encouraging that the government is looking at a whole system cost of conversion from coal to biomass, as currently it is not economic to convert unit four without fiscal help.”
Last month the European Commission launched an investigation into the state funding of the third biomass conversion. Drax said it welcomed the inquiry as the next step in the process. “By converting a further unit to biomass, Drax would play a huge part in helping the UK achieve its 2020 carbon emissions target in a pragmatic, economic way. This decision is already benefiting the environment; independent carbon accounting shows that we achieve carbon savings of around 86 per cent through burning sustainable biomass in place of coal.”
Following the 2009 Renewable Energy Directive, the UK is committed to obtaining 15 per cent of its energy from renewable sources by 2020. Drax aims to play its part. Thompson points out that to replace the current biomass generating capacity of 2,000mw at Drax with onshore wind would add £3.6bn to the costs of decarbonisation by 2020, and reaching the 2050 target without biomass would cost an additional £44bn.
“What we are doing at Drax is already making a big difference, and this year’s planned full conversion of a third unit will result in a carbon saving of 12 million tonnes per year – the equivalent of taking more than three million cars off our roads.”
Despite the positive angle of moving from coal to renewable fuel, there are still naysayers who point out that the carbon footprint of transporting the biomass fuel pellets to Drax from their US suppliers is not ideal. The biomass wood pellets come mainly from North America, where the company has invested millions in the infrastructure required for their production. This includes the facilities for processing raw materials into pellets, together with railheads for transporting the product to ports.
Thompson agrees that it may not seem an environmentally friendly production method at face value, but the volume of biomass transported, combined with the fact that the wood used is forest residue, means that the carbon footprint is lower than one may expect.
“Sourcing the biomass material has been a long-term project which we have taken very seriously. The key part of the decision is to reduce carbon emissions, and at Drax, we want the best sustainability so therefore only buy from responsible producers. This has meant building up sustainable biomass partnerships, and Matthew Rivers, our director of group sustainability, has been key in building relationships with our American suppliers. We buy all of our biomass in line with our industry-leading sustainability policy, which sets out clear guidelines by which we operate. It is important that we only use biomass from sustainably managed forests.”
The relationships between Drax and its overseas suppliers were not developed overnight, and the talks and compliance issues with contractors have taken several years. “It has been an education for both Drax and the suppliers,” says Thompson. “The long-term business plan has to be sensible, and this has been a long process taking sometimes 10 to 12 years, with a stringent due diligence process. Over the past few years, it became clear that a lot of our competitors did not do the levels of auditing and research required for the change to biomass, which led to problems for them. Drax is doing it in a responsible and sustainable way.”
As a further sign of the commitment towards alternative fuel, the company opened a new biomass storage facility in the Port of Liverpool last October at a cost of £100m. The new terminal includes a rail loading facility and capacity for 100,000 tonnes of biomass. It will also be capable of loading 10 trains per day. This storage facility will add extra capacity and resilience to Drax’s biomass supply chain.
Despite setbacks the company has suffered under the scrapping of levy exemption certificates, and also the announcement there would be no more ‘grandfathering’ (or exemptions) for new conversions under the Renewables Obligation scheme – although support is protected until 2027 – Thompson is upbeat about the future of the company.
“The business remains strong and the strategy is robust. Biomass units are as flexible as coal. David Cameron is phasing out coal and the rate of coal plant closures is notable. The UK has the highest carbon tax in the world, and if it does look like it will become uneconomic to carry on using our coal-fired power generators, we will look at a range of scenarios to find a sensible solution. The energy market is evolving.” Of the government’s vow to close coal-fired stations by 2025, Thompson says: “Over the last decade we’ve developed the latest technology to transform our power station and more than half the electricity we generate now comes from sustainable biomass.
“Coal and gas still produce the majority of the UK’s electricity and a truly diverse energy mix is the key to keeping the lights on in an affordable way. Getting coal off the system presents a huge opportunity for government to use existing power stations to generate affordable electricity using sustainable biomass.”
Women at work
Thompson is a veritable force, and it’s difficult to imagine how she finds enough times to make the key decisions required to run such a large-scale company. But she does so with aplomb, together with running two homes (in London and Yorkshire) and a family life, and still finding time to count hiking and skiing as her favourite pastimes. The power industry is traditionally a male-dominated arena, so how does she feel about a lack of female counterparts? “Women may be in the minority in this particular industry, but we believe in having the best person for the job. I support equal access for women, but in many areas we already have that.”
And on that note, she is whisked away to her next meeting.
HQ Selby, North Yorkshire
Gross profit £450m (2014)
High point The transformation of Drax from the UK’s biggest emitter of carbon dioxide to Europe’s largest decarbonisation project.
Low point Drax hit financial trouble in 2002 when wholesale electricity prices fell to an all-time low and forced one major customer into administration.
Did you know? Originally built, owned and operated by the Central Electricity Generating Board (CEGB), Drax power station was constructed and commissioned in two stages between 1974 and 1986. It is the last coal-fired power station to be built in the UK. Following privatisation of the electricity sector, Drax came under the ownership of National Power. It was later acquired by US-based AES, before being restructured and listed on the London Stock Exchange.