29th Aug 2024 17:09
(Alliance News) - Drax Group PLC is to pay a GBP25 million penalty after the UK energy regulator said it did not accurately record data, though the lack of any evidence that it biomass offering is not sustainable offered some relief.
Ofgem carried out a 15-month investigation into Drax after it was accused of burning wood from unsustainable sources and claims that it was taking timber from precious rare forests in Canada, PA reported.
The regulator said in May last year that it was looking at whether Drax was in breach of "annual profiling reporting requirements relating to the Renewables Obligations scheme", as well as other related matters.
But Ofgem did not find any evidence that Drax's biomass was not sustainable or that Drax had been issued renewables obligation certificates incorrectly.
Ofgem said Drax will pay GBP25 million to its voluntary redress fund as a result of the findings.
Analysts at Jefferies commented: "Ofgem has today closed its investigation into Drax's biomass profiling data, confirming that it didn't find any evidence that Drax's biomass isn't sustainable, or it has incorrectly issued ROCs. Ofgem did find some process gaps, but considered these issues as technical in nature."
Jefferies believes the end of the probe "removes an overhang from the stock".
Shares in Drax closed down 0.4% at 653.00 pence each in London on Thursday.
By Eric Cunha, Alliance News news editor
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