Drax biomass subsidies in 2024

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Drax earned £869 million in public subsidies for burning forest biomass in 2024, the second highest year to date. Payments to Drax have rebounded since the energy crisis, pushing up UK energy bills with no guarantee of reducing CO2 emissions.

3 Apr 2025

1 Minute Read

Frankie Mayo
Senior Energy & Climate Analyst – UK
Ember

Subsidies push Drax to record earnings

Ember analysis of Drax’s annual report shows that the company earned £869 million in public subsidies in 2024, the overwhelming majority of these for burning imported biomass (wood pellets) at Drax power station. This equates to over £2 million per day in subsidies, an average cost of around £10/year per household in the UK.

Three of four units at Drax are subsidised through the Renewables Obligation scheme, from which Drax earned £652.6 million in 2024 (2023: £601.8 million). Drax has one unit which is subsidised through the Contracts for Difference (CfD) scheme, for which Drax received from the LCCC £216 million in 2024. The total subsidy received in 2024 is £268 million more than 2023, as Drax generated less during the energy crisis. The annual report also shows that 2024 was the company’s most profitable in 35 years, with earnings over £1.06 billion.

Biomass phasedown announced

Continued reliance on biomass raises various concerns. The current CfD for Drax sets a strike price of £138/MWh (2024 prices), which is 70% higher than the most recent offshore wind strike prices. Beyond the high cost of power generation from biomass, there are unresolved concerns around the high emissions associated with the input fuels. Although biomass generation is considered as carbon neutral in UK law, a growing weight of scientific evidence is questioning this basic assumption. As previously reported, the European Academies Sciences Advisory Council (EASAC) has stated that using woody biomass for power “is not effective in mitigating climate change and may even increase the risk of dangerous climate change.”

However, it was recently announced that in 2027 the existing subsidy scheme will be replaced by a new CfD scheme for all four units, which will reduce the overall subsidy and generation from Drax power station by around half. The four year period from 2027-31 represents the beginning of a wind down as the role of Drax is increasingly reduced by the development of clean power and clean flexibility out to 2030 and beyond.

“Drax’s record-breaking earnings are coming at the expense of the British billpayer, and all for something that is polluting, costly and increases import dependence. The UK must commit to long-term phase-out of biomass burning.”

Frankie Mayo
‍Senior Energy & Climate Analyst – UK, Ember

Methodology

Ember calculation for impact on residential energy bills: Total annual subsidy divided by residential/industrial split of energy bills, divided by number of households

Ember takes the ROs subsidy earnings figure as reported in Drax’s annual report (2024). The CfD figure is taken from the LCCC reporting on the payments it provides to each generator. The CfD value can be negative if the market reference price is higher than the generator strike price.