£225m project to convert half of Drax coal-fired power station into biomass is set to be the next project to receive UK Guarantee
Ministers have agreed to guarantee a £75m portion of the £225m private financing of the project to convert half of the Drax coal-fired power station into a biomass plant, according to reports.
The report in the Financial Times said the £225m project to convert half of Britain’s biggest coal-fired power station into a biomass plant would be the next project to be given a government guarantee through the £40bn UK Guarantees scheme.
The scheme involves converting three of the six generators at the Drax power plant to biomass.
According to the FT, the Treasury is set to guarantee £75m of debt on the project, with the rest of the funding coming from private investors and the state-owned Green Investment Bank.
It would be only the second project approved under the UK Guarantee scheme, which was launched last July in a bid to accelerate large infrastructure projects.
Last week it emerged that the first project earmarked for a guarantee – a £1bn order of new trains for London’s Crossrail line – would now proceed without a guarantee, after a deal was struck between government and the Mayor of London to finance the contract wholly with public money.
The move means just one project - the proposed extension of the Northern Line to Battersea Power Station - has now be granted a UK Guarantee since the scheme was nearly nine months ago.
According to the FT, a further 14 projects have now “pre-qualified” for support through the scheme, with an expectation that more will be announced in the coming weeks.
As Building reported last month, EDF have approached Treasury about the possibility of a guarantee through the scheme for its £10bn Hinkley nuclear new build programme.