Drax is considering conversion to natural gas of coal-fired capacity at its North Yorkshire site, the UK generator said Wednesday.
Announcing six-month results, Drax chief executive Dorothy Thompson said the company's research and innovation team had identified "potentially attractive options to repurpose our remaining coal assets."
This was a reference to an early-stage proposal to convert Drax's coal capacity to gas. It has three 645 MW coal units remaining.
Conversion to gas would "exploit infrastructure and grid access" at Drax's generation site near Selby, and be eligible for 15-year Capacity Market contracts, Drax said.
Drax has also been testing one of its two coal units to burn 100% compressed wood pellets, Thompson said. The company has already converted three 645 MW units to biomass.
"The unit has performed well but there is further work to do to ensure that it delivers high output reliably and safely on a sustained basis, which we believe is achievable," she said.
Drax would continue the trial through the summer, returning the unit to coal fuelling this winter "to ensure high availability through the colder months," Thompson said.
Meanwhile the generator said two of its four 299 MW rapid response gas projects were ready to participate in the February 2018 capacity auction.
Drax would be looking to secure 15-year contracts for capacity delivery starting in winter 2021-22. The units failed to win contracts in a previous round.
Permits were being secured for the other two units to allow them to participate in the 2019 capacity auction, Drax said.
First half 2017 electricity output of 10.7 TWh was down 0.2 TWh year on year. This comprised biomass-fired generation of 7.3 TWh and coal-fired generation of 3.4 TWh, both stable on the year.
As at July 12, 2017 Drax had 2017 contracted power sales of 18.8 TWh at an average achieved price of GBP45.9/MWh ($57/MWh), and 11 TWh at GBP42.2/MWh for 2018.
It had 1.1 TWh of natural gas hedges at 46.7 pence/therm for 2017, and 2.4 TWh at 46.4 p/th for 2018.
Renewable Obligation support for Drax's biomass output was put at GBP45.6/MWh for 2017, up from GBP42.1/MWh for 2016.
Generation income for the six months increased 1% to GBP1.198 billion.
Revenue from ancillary services increased to GBP21 million for the period from GBP20 million for H1 2016.
In capacity markets, Drax has now secured contracts valued at GBP80 million for 2017-21.
Consolidated revenue for the period of GBP1.8 billion was GBP314 million greater than the same period in 2016, driven by higher generation sales and the acquisition of retailer Opus Energy.
Six month EBITDA rose from GBP70 million for H1 2016 to GBP121 million for H1 2017.
A loss before tax of GBP83 million included unrealized losses related to foreign currency hedging of GBP65 million, plus increased depreciation of coal assets, the generator said.
