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Court wrangle for Drax over renewable energy subsidy

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Note: since this piece was posted DECC has won its appeal against Drax (7 August 2014) and the power generator has abandoned further legal action (with its share price duly dropping). See “The Court of Appeal judgment” below.

Shares in UK energy company Drax leapt more than 40p after it won a High Court victory against the Department of Energy  and Climate Change (DECC) over renewable energy subsidies (14 July 2014). It is the second court win against DECC mishandling of the green energy business sector announced within days. (See previous post)

DECC had failed to accept one of Drax’s biomass conversion projects as eligible for a subsidy scheme involving contracts for difference (CfDs), intended to provide certainty on prices for renewable generation.

Mrs Justice Andrews ruled that: “When properly understood, Drax’s application did satisfy the Key Criterion [for the CfD subsidy] and no decision maker, properly informed, who accepted that Drax was telling the truth …  could have concluded that it had failed to do so or that the information given by Drax was insufficient to satisfy him that it passed the test.” She added: “The matter will have to be remitted to DECC for reconsideration in the light of this judgment.”

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