Drax has conceded defeat in its dispute against the Government over subsidies to convert burners from coal to biomass at its Selby facility, the biggest power station in the UK.
The Court of Appeal overturned a High Court ruling that the Department for Energy and Climate Change (DECC) was wrong to exclude a power-generating unit from its Contracts for Difference (CfD) regime.
The CfD scheme is designed to give investors the confidence they need to pay the costs for new projects up front. Drax went to court after DECC changed an earlier position that would have allowed two of the units at Selby to qualify for CfD.
In July, the court ordered DECC to reconsider the awarding of the subsidy but the department successfully argued its case at the Appeal Court.
Judges were reported to have ruled that officials had taken a “reasonable approach” to the issues raised and it was not “an appropriate case for interference by the court”.
Drax’s share price, which increased by more than 5% after the High Court case, fell more by than that following the ruling.
The group said it would not take the case further, adding: “Drax will now consider its options for the full conversion of this unit, where eligibility for support under the Renewables Obligation has been confirmed.”
Phil Whitehurst, a national officer for the GMB union, accused EU and UK policy makers for pursuing contradictory objectives in terms of setting energy policy.
“One the one hand they are setting the parameters for power generation with the aim to lower carbon emissions. They want private investors to fund the conversion process of these facilities.
“However they are not prepared to pay the subsidies needed to make the conversions financially feasible. This lack of coherence risks driving investment away.”
Whitehurst called on DECC to Drax the necessary subsidies for a viable conversion all the remaining boilers.