Drax's US pellet plants become operational

OREANDA-NEWS. July 30, 2015. UK utility Drax's Morehouse 450,000 t/yr wood pellet production plant in Louisiana, the US, is now fully commissioned and operational.

The Amite 450,000 t/yr pellet plant in Mississippi has produced pellets and final commercial tests are expected this week or next. The plant was delayed by unfavourable weather during construction but will be fully operational by the end of August, chief executive Dorothy Thompson said.

Both plants have shipped pellets this year to Drax's Selby power plant in the UK from the company's 3mn t/yr facility at the port of Baton Rouge, also in Louisiana.

Drax has started the process of obtaining sustainability biomass partnership (SBP) certification for both plants. The SBP is an industry effort to develop a common sustainability standard but is yet to award certified status to any pellet production plants. Drax expects the first certifications to be awarded by the end of this year. SBP certification will be compliant with the UK's Department of Energy and Climate Change's sustainability standards that are mandatory from the end of this year.

The utility is considering further options to produce its own pellet supply, and will consider commissioning a third, 500,000 t/yr plant in the US, "probably in partnership with others", Thompson said. The new plant would ship pellets through the Baton Rouge port facility to enhance supply chain efficiency.

Drax said it is "well contracted" for 2015 biomass supply but is "less well covered" for forward purchases. It is also negotiating long-term supply agreements. Pricing levels for contracts are similar to previous levels, Thompson said. Securing long-term contracts requires investment in new pellet plants, she said, and state aid approval for the contracts for difference subsidy will underpin investor confidence and help this investment.