Drax (LON:DRX) chairman Philip Cox says the company was ‘disappointed and surprised’ with the government’s recent decision to dump tax incentives for renewable power.
The traditional coal-fired power firm, which now relies heavily on biomass operations, saw its share price fall more than 25% earlier this month after George Osborne’s budget withdrew certain tax exemptions for renewable power.
Drax expects the Chancellor’s decision will put a £60mln dent in the group’s annual financial performance.
Biomass represented some 37% of the group’s total power sales in the first half and it had protected the business from the increasing cost of UK carbon tax, Drax said in today’s interim results statement.
“As the UK's single largest generator of renewable energy, Drax should be a cornerstone of UK generation for the long term,” Cox said.
“We were therefore disappointed and surprised that the recent Budget included the removal of the Climate Change Levy exemption for power generated from renewable sources.
“We remain committed to working constructively with UK Government to forge a sustainable and stable regulatory framework that encourages and rewards the required investment in our key sector.”
In today’s interim results, to June 30, Drax reported earnings of £120mln, which is an 18% improvement on the same six months of last year. Profit before tax was reported as £53mln, versus an £11mln loss in the corresponding period of 2014.