Drax, a major power generator, is currently under investigation by the Financial Conduct Authority (FCA) concerning “historical statements” about the sourcing of wood pellets for its biomass power station. The FCA confirmed the investigation will examine compliance with disclosure and transparency rules over a timeline from January 2022 to March 2024, reviewing Drax’s 2021, 2022, and 2023 annual reports.
Drax indicated that the FCA’s inquiry pertains to certain historical claims regarding its biomass sourcing and the compliance of its reports with relevant listing rules. The company has stated it will cooperate with the investigation.
According to the thinktank Ember, Drax is set to receive over £10 billion in renewable energy subsidies from 2012 until 2027. Concerns persist that the wood pellets utilized may not always be sustainably sourced. In the previous year, Drax was fined £25 million for supplying inaccurate data related to earlier government subsidies. Additionally, the public accounts committee has scrutinized the value of the significant subsidies granted to Drax, suggesting that future financing might not deliver value for money.
Notably, despite these issues, the UK government has decided to continue offering new subsidies to Drax’s biomass facility until 2031, post the current subsidy period ending in 2027. This bridging scheme is intended to support Drax until it can implement a new project that includes carbon capture technology, which is projected to incur substantial costs.
Drax’s shares fell by 8% following news of the FCA investigation, as analysts expressed concerns that the investigation could delay the new support contract for extending subsidies. While the FCA can impose penalties for non-compliance, analysts believe it may not significantly impact Drax’s operations. A former Drax executive had previously alleged misleading statements regarding biomass sourcing, although Drax denied these claims and reached a settlement.
Source: https://www.theguardian.com/business/2025/aug/28/drax-investigated-by-uk-watchdog-over-historical-statements-on-biomass-sourcing