The EU Commission has approved the UK support for the conversion of one unit of the Drax power station from coal to biomass.
The Commission said the plans complied with EU state aid rules as the project will support the region’s environmental and energy targets without distorting competition in the Single Market.
Drax’s unit will have a capacity of 645MW running exclusively on wood pellets. It is due to use around 2.4 million tonnes of them per year.
The UK Government, which notified the EU of its plans last year, intends to support the project with a premium paid on top of the market price of the electricity generated.
The project will receive the support until 2027 will generate around 3.6TWh of electricity per year according to UK estimates.
The Commission opened an investigation to check the aid would not lead to overcompensation and undue distortions of competition in the biomass market.
It concluded the project’s contribution to increasing the share of renewable energy produced in the UK outweighs any potential distortions of competition that could be triggered by the government support.