Drax profits hit £3m a day as firm continues receive to subsidies for its wood-burning power station

The boss of Drax has insisted its controversial wood-burning power station is vital ‘when the sun isn’t shining and the wind isn’t blowing’ as it cashed in on another £800million of subsidies. The North Yorkshire plant – described by opponents as Britain’s ‘biggest green hoax’ – has received billions of pounds from the Government in recent years because wood pellets are classed as a source of renewable energy.

But in a blow to Environment Secretary Ed Miliband, the biomass firm yesterday said it would slow its investment in green technology just weeks after securing more public cash. It came as Drax, which is a converted former coal power station, reported its biggest profit in its history.

Adjusted earnings hit £1.06billion in 2024 – nearly £3million a day – from £1.01billion a year earlier. Business was boosted by another £801million of taxpayer support in the form of green subsidies. In theory, biomass can create carbon-neutral energy because trees and plants first absorb carbon, then are burnt and release the same carbon back into the atmosphere.

Emissions: Drax's North Yorkshire plant (pictured)– described by opponents as Britain’s ‘biggest green hoax’ – has received billions of pounds from the Government. But critics say it creates more emissions in the short-term, and that Drax’s green claims assume that the company only burns sustainable materials.

Drax has been accused of burning wood from some of the world’s most precious forests, although it has insisted the biomass used is sustainable and legally harvested. Last summer, the firm was ordered to pay a £25million penalty after a regulator found it had failed to report accurate data on the type of wood it burned.

Yesterday, chief executive Will Gardiner said the fresh subsidies arrangement was ‘a major milestone’. [It] provides the basis on which the site continues to generate electricity for the country, especially when the wind isn’t blowing and the sun isn’t shining,’ he said. ‘This is an investment in security of supply.’.

Gardiner added it had supported UK energy security and helped to keep ‘the lights on for millions of homes and businesses, while supporting thousands of jobs throughout our supply chain’. The Government this month announced new handouts for the plant from 2027, when its current arrangement will run out, to 2031 –to the dismay of green groups.

Campaigners have called on ministers to end support for burning biomass amid fears over the environmental impact. Taxpayer cash: Drax chief exec Will Gardiner (pictured) said the fresh subsidies arrangement was ‘a major milestone’. Under the new subsidies agreement, stricter sustainability requirements are also being brought in, with ‘substantial penalties’ if they are not met, the Government said.

It will halve the subsidies paid to Drax and include a windfall mechanism that means that 30 per cent to 60 per cent of profits will be returned to consumers if they go above expected limits. Biomass is the cheapest option in the short term, but without extra technology to capture carbon emissions from burning wood it is not a long-term solution, ministers have said.

Drax claimed it expects ‘to commit less development investment’ to projects including renewables and carbon capture schemes until it gets ‘greater certainty on appropriate regulatory structures and investments returns’. Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.