5th Jan 2016 11:58
LONDON (Alliance News) - The European Commission on Tuesday said it has opened an in-depth investigation to assess whether the UK's plans to support the conversion of part of the Drax Group PLC coal power plant to operate on biomass are in line with EU state aid rules.
The Commission said it will investigate to make sure that the public funds used to support the Drax project are "limited to what is necessary and do not result in overcompensation". It will also assess whether the positives of meeting EU energy and environmental objectives outweigh "potential competition distortions" in the market for biomass.
Drax Group noted the formal state aid investigation into the award of the investment contract for its third coal-to-biomass unit conversion.
"This is the next step in the process for obtaining state aid approval and is in line with expectations," Drax said.
"Drax welcomes the opportunity to work with the UK government and the European Commission to complete the state aid clearance process," the company added.
Shares in Drax were down 3.4% at 223.60 pence on Tuesday morning.
By Samuel Agini; [email protected]; @samuelagini
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