Shares in controversial power plant Drax made gains after Ed Miliband agreed to hand the company yet more taxpayers’ cash despite a blazing row over its environmental credentials. The Energy Secretary struck a deal with the FTSE 250 firm to provide fresh subsidies for its wood-burning biomass site in North Yorkshire, which produces around 5 per cent of the UK’s electricity. The handouts were due to expire in 2027 but have now been extended to 2031. Drax shares jumped 3.8 per cent, or 24p, to 659p.
The power station – a former coal-fired plant – has received billions of pounds in subsidies because wood-burning is classed as a source of renewable energy. But critics argue that the wood comes from forests that should be protected. Ministers yesterday said the plant is ‘important to delivering a secure, value-for-money power’. But they conceded Drax cannot be allowed to operate in the way it has until now, or with the level of subsidy it received in the past, which enabled it to make ‘unacceptably large profits’.
Subsidies: Drax's wood-burning biomass site in North Yorkshire produces around 5% of the UK’s electricity. As such, the level of subsidy has been halved and stricter sustainability requirements have been brought in. Analysts at Morgan Stanley said the terms of the deal were ‘attractive’ and ‘more favourable than expected. And while the rising share price will also please investors, campaigners reacted with fury.
Doug Parr, policy director for environmental group Greenpeace UK, said: ‘Trees should be left to grow and not be burnt in a major subsidy-fuelled bonfire.’. The FTSE 100 hit an intraday high of 8785 before ending the day up 0.8 per cent, or 67.27 points, at 8767.8 – also a record close. The FTSE 250 advanced 0.9 per cent, or 178.44 points, to 20986.28. Gold hit another record high of $2911 an ounce after Donald Trump said he would slap tariffs of 25 per cent on steel and aluminium imports to the US.
Demand for the precious metal is strong as investors look for somewhere safe to park their cash at what is an unpredictable time for the global economy. Gold miners benefited in London with Fresnillo up 4.8 per cent, or 37p, to 802p, Endeavour Mining adding 3,3 per cent, or 56p, to 1781p and Hochschild rising by 2.5 per cent, or 4.6p, to 190.6p. British Airways owner International Consolidated Airlines Group (IAG) went the other way, slipping 3.5 per cent, or 12.9p, to 353.4p, after analysts at Goldman Sachs cut their rating on the stock from ‘buy’ to ‘neutral’.
However, Goldman also raised the target price on IAG to 375p from 300p and said it was not ‘overly expensive’ even after a more than doubling in the share price since the start of last year. It is all change at chemicals group Johnson Matthey. Chairman Patrick Thomas is stepping down and finance director Stephen Oxley is being replaced by Richard Pike of packaging firm DS Smith. The shake-up comes amid pressure from its largest shareholder, Standard Investments. Shares added 0.9 per cent, or 13p, to 1435p.
A funding update from Supply@Me Capital sent shares in the fintech group crashing 20 per cent to an all-time low. The stock fell 0.00045p to 0.0018p after it warned of ‘cash flow pressure’ and said it was now ‘actively exploring alternative funding options’. Bosses promised to ‘update the market in this respect at the earliest opportunity’. Supply@Me Capital’s shares have fallen more than 99 per cent since listing in March 2020.
