The head honcho at Britain's biggest powerplant is stepping down. Drax boss Dorothy Thompson has led the firm for 12 years, during which she pushed hard to convert the coal plant to biomass. However, a reversal in the government subsidy policies in 2014 set a cat among the pigeons, causing Drax's share price to fall as much as 75% over two years, though it's since recovered some of the damage.
Here's MT's interview with Thompson from July 2016, where she discusses business, Brexit and biomass.
It’s a leadership dilemma that has faced many a chief exec recently. Whatever your views on the rights or wrongs of it, Brexit has created historic levels of uncertainty and concern.
People are worried and anxious. What message should you send to your staff, and how should you pitch it to avoid sounding either doom-laden on the one hand or platitudinous on the other?
For Dorothy Thompson, boss of the UK’s largest power station, Drax, which supplies around 7% of the country’s electricity, the key was keeping a cool head. ‘We need to be calm in the midst of this crisis – we are an essential service and we have an important role to play in keeping people confident that power will be there when they need it.
‘So the note I sent to staff was about the need to keep things stable and do what you can do, well. At a time when people are panicking about a lot of things, this is one thing you don’t have to panic about. We thought long and hard about it and that is the best thing we can do.’
It helps that Drax’s share price - which although down more than 50% since its peak at around £8.00 in 2014 - has been less badly hit than some since Brexit. In fact it's risen slightly to stand at around £3.30, thanks says Thompson to limited exposure to the European market and a solid currency hedge against the dollar. ‘We buy a lot of our fuel in foreign currency and that has been moving, but we are very well protected. There hasn’t been a dramatic move in the shareprice because our shareholders understand that.’
The latter is especially important since the power station – which was designed to burn coal in its six huge furnaces – now burns low-carbon biomass in three of them, an innovative effort to update smokestack era technology for the climate-friendly 21st Century. ‘We now burn 70% renewables and 30% fossil fuels, the technology is fantastic - quite brave and innovative. We have lasers in the boilers analysing exactly how the biomass is burning, for example.’
Equally challenging has been developing the supply chain for the renewable fuel, which is shipped in the form of compressed wood pellets to Drax’s North Yorkshire home, all the way from forests and sawmills in the USA. It’s a long journey involving trucks, ships and rail transport that has led to criticism that the biomass really isn’t very sustainable at all.
‘You can understand why people would think that, if you don’t understand the developments in the supply chain then you would picture something very inefficient, but we have great technology so we can minimise the carbon used. We now have eight or nine years worth of data and we are confident of our carbon footprint.’
Biomass fuel arriving at Drax in custom-designed railway wagons
But why not source more locally? ‘Something like 50% of the fibre we use is the residue from sawmills, we are using their leftovers. You need a large working forest to supply that demand, and there are none large enough in the UK.’
Borrowing heavily from just in time and lean manufacturing techniques, Thompson reckons Drax’s supply chain is now as innovative as its biomass burning furnaces. ‘I think of us like a Japanese manufacturer, we re doing work on lean efficiency which came out of Japan. For the consumer we are now the lowest cost producer of large scale renewable electricity in the UK.’
The prospect of selling its biomass technology package abroad is now on the cards, with interest being expressed particularly by the Japanese, keen to find a renewable replacement for nuclear reactors decommissioned in the wake of the Fukushima disaster.
It’s an optimistic note to sound for Thompson and Drax, which has been beset by changes of government policy over exemption subsidies and a promising carbon capture and storage project which is now back on the shelf. Does she resent the way that Whitehall apparently regards some renewable technologies as more deserving than others?
‘Where we do feel underappreciated is in terms if the benefits of providing power when you need it.’ The other renewables - wind, solar – cannot be relied upon to do this, she points out, and so back up must always be provided for when the wind isn’t blowing or the sun is not shining.
‘In the UK these costs are paid by the consumer, but they are hidden, combined into basic grid costs. We feel hard done by because if grid services were charged on a equitable basis then it would be very clear that we are a good low-cost solution. We’d like to see that change, the government has been working on this for the best part of a year and a half and we await the results with interest.’
Drax's own research suggests that greater transparency over these grid support costs would point to a greater role for biomass in the energy mix and save consumers around £2bn. 'Wind and solar all have a part to play but you can't today run an electricity system on them alone, they are too erratic.'
A better appreciation of costs might also help her in her goal to convert the remaining units at Drax to full biomass operation, helping to end the era of coal fired power stations in the UK. In the meantime, she is confident that we won't need to stock up on candles, whatever Brexit throws at us.
"There is a capacity squeeze – it will be a bit tighter this winter and we are closer to having an event, but I believe there has been sufficient foresight. I support the view that the lights must stay on and I think the National Grid has been innovative in the way it protects the UK.’