News that the National Audit Office (NAO) plans to scrutinise the government’s biomass strategy served as another reminder of the fragility of Drax’s business model and how jittery this is making investors.
When the government reaffirmed in August that burning pelletised wood to generate electricity could play a key role in reducing dirty emissions, it barely triggered a response. The big reaction came a month later when the UK’s independent public spending watchdog announced that it wanted to examine whether this expensive and controversial power generation process represented the best way to spend taxpayers’ money.
Bullish analysts played down the importance of this potential setback. They noted that the NAO routinely did this sort of thing and did not wield enough influence to force the
