Drax slapped with £25m penalty for misreporting sustainability data

On the back of the findings, plant owner Drax Power Limited has agreed to pay £25m under Ofgem’s Voluntary Redress Fund. An investigation carried out by the energy regulator found that Drax had failed to comply with its obligations under the Renewables Obligation Order (ROO). Ofgem said that ‘an absence of adequate data governance and controls’ had resulted in Drax misreporting data in relation to their annual profiling submission for compliance period 1 April 2021 to 31 March 2022 (CP20).

According to Ofgem, Drax could not provide ‘sufficient evidence’ to show how its CP20 annual profiling submission had been arrived at and was unable to support the reliability of its profiling data reporting of forestry type and sawlogs for Canadian consignments for that same period. Drax has accepted the findings of the investigation and agreed to re-report its CP20 annual profiling submission in respect of forestry type and saw log proportions.  

“This has been a complex and detailed investigation,” said Ofgem chief executive Jonathan Brearley. “Energy consumers expect all companies, particularly those receiving millions of pounds annually in public subsidies to comply with all their statutory requirements. 

“There are no excuses for Drax’s admission that it did not comply with its mandatory requirement to give Ofgem accurate and robust data on the exact types of Canadian wood it utilises. The legislation is clear about Drax’s obligations – that’s why we took tough action.”

Drax has come under growing scrutiny in recent times following its switch from coal to biomass around a decade ago. The power plant has claimed the switch makes it ‘Europe’s biggest decarbonisation project’, but this narrative has been increasingly challenged, with question marks over the sustainability of Drax’s wood pellets and biomass as a ‘clean energy source’ more generally.

The switch to burning wood has also allowed the company to harvest billions in clean energy subsidies, while still emitting enormous quantities of CO2 into the atmosphere – around 12 million tonnes per year. In February 2024, a BBC Panorama investigation found that Drax harvested timber from primary forests in Canada it had previously claimed were "no-go areas".

"Yet another major company is taking billions from the public – in this case via energy bills - but failing to follow basic rules to protect the environment,” said Matt Williams, senior forest protection advocate for the Washington-based Natural Resources Defense Council. “Many people are trying to figure out how they'll afford to heat their homes this winter. They might question why they're paying for billions in green subsidies for a company that's breaking environmental rules and doesn’t seem to even know where it gets its wood from.

"Earlier this year the National Audit Office concluded that government checks on bioenergy companies aren’t robust enough to rule out environmental harm, and a BBC Panorama investigation found that Drax is logging old and ancient forests in Canada.

"This ruling shows how difficult it is to prove that burning wood from forests is good for the environment. There's one simple reason for that - it isn't. The £25m fine Drax have volunteered to pay is a drop in the ocean compared to the billions they're asking for in new subsidies. The Energy Secretary Ed Miliband MP must see - it's not worth paying even more of the public's money to a company that can't play by the rules.”

A spokesperson for the Department for Energy Security and Net Zero added: “We expect full compliance with all regulatory obligations – consumers rightly expect the highest standard of accountability from generators.

“The size of the redress payment underscores the robustness of the regulatory system and the requirement that generators abide by both the spirit and the letter of the regulations.

“The detail of the investigation and subsequent findings are a matter for Ofgem.”