Drax group has reported a decline of 45 per cent in its profits in the first half of current year. Its selling prices could not compensate the increase in coal costs and carbon emission allowances.  It registered £150m profit before tax, down from £273m registered last year, though revenues jumped to £802m from £640m on account of increased selling prices. Drax revised its electricity charges from an average £48.1 megawatt an hour to £53.6.

Erosion in profits was caused by the costs of coal and carbon emissions which doubled up from £222m to £413m during last few months. Coal prices shot up from $68 a tonne to $218 between 2006 and 2008. The cost of extra carbon emission permits went up to £108m from £11m during the same period. The permit for one tonne emission of CO2 now costs £16.50 against £3 in the previous years.
Drax has tried to contain other costs by increasing co-firing capacity and efficiency of its generators. It is planning to generate 500 megawatts of output through sustainable sources making use of 15 per cent extra renewable resources.

According to chief executive Dorothy Thompson, despite the fact that bio matter is costlier than coal, Drax is confident of getting sufficient economic return on its investment.

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