The Financial Conduct Authority (FCA) has launched an investigation into energy giant Drax over «historical statements» made about the sourcing of wood pellets used at its North Yorkshire power plant.
The probe will cover the period from January 2022 to March 2024 and will assess whether Drax complied with transparency and disclosure rules, including in three annual reports.
Drax confirmed the investigation and said it would cooperate fully. The company has received more than £10bn in renewable subsidies since 2012, despite long-running concerns over the sustainability of its biomass fuel.
Last year, Drax was fined £25m for supplying inaccurate data in subsidy claims. In April, the government’s public accounts committee questioned whether continued subsidies for Drax offered value for money.
Shares in Drax fell 8% on Thursday after the FCA announcement, with analysts warning the case could delay a new subsidy deal due to run from 2027 to 2031. That agreement is intended to keep the plant operating until carbon capture technology is introduced – a project that could cost billpayers more than £40bn.
Government officials insist that under the proposed «bridging scheme», Drax would play a reduced role, running less often than today but still supporting the UK’s plans to cut fossil fuel use to 5% of electricity by 2030.
The investigation comes months after a former executive accused Drax of misleading claims about its biomass sourcing, an allegation the company denied before reaching a settlement.
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Subsidies: Drax has received more than £10bn in renewable energy subsidies since 2012 and could receive billions more under new government plans. Critics say this is poor value for taxpayers.
Sustainability concerns: Campaigners argue that burning imported wood pellets is not truly «green» energy. Some studies suggest it can release as much carbon as coal, especially if forests are not replanted quickly.
Fines and data issues: In 2024, Drax was fined £25m for providing inaccurate data used to claim subsidies.
Carbon capture gamble: The government plans to support Drax until it can switch to biomass with carbon capture technology. The project could cost billpayers over £40bn, with doubts about whether the technology will work at scale.
Employment tribunal claims: A former executive accused Drax of misleading statements about its biomass sourcing. The case was settled out of court, with Drax denying wrongdoing.
