The High Court has backed energy company Drax Group in its dispute against the Government over subsidies to convert the power station’s burners from coal to biomass.
Drax decided to take legal action in December 2013 after the Department for Energy and Climate Change (DECC) said that only one of the two power-generating units the company wanted to convert was eligible for an investment contract under the Contracts for Difference regime.
In October, both the units had been deemed eligible for the scheme, which is designed to give investors the confidence they need to pay up-front costs for new projects.
The High Court has now ruled that the second unit conversion was also eligible for an investment contract, and ordered DECC to reconsider the awarding of the subsidy in light of this judgement.
Drax’s share price increased by more than 5% after the announcement. DECC has been granted leave to appeal.
A department spokesperson said: “We believe that we ran a fair and robust bidding process for renewable generators seeking early Contracts for Difference. We have been granted permission to appeal and will now consider the decision carefully.”
Any award of an investment contract would be subject to EU state aid clearance, Drax pointed out.