Drax announces plans to double pellet production capacity by 2030

Drax Group plc on Dec. 1 announced plans to double its biomass pellet production to 8 million metric tons per year by 2030. The company also announced commissioning is nearly complete at its facility in Demopolis, Alabama.

Drax made the announcements as part of its capital markets day release and a separate trading update, both released on Dec. 1.

Drax currently has 13 operational pellet plants with a combined nameplate capacity of approximately 4 million metric tons. Capacity will soon increase to 5 million metric tons with two additional plants currently undergoing commissioning, along with other development and expansions. The 8-million-metric-ton-per-year goal announced by Drax will require more than 3 million metric tons of additional biomass pellet production capacity. To deliver on that goal, the company said it is developing a pipeline of projects, principally focused on North America. Drax plans to take final investment decision on between 500,000 metric tons per year and 1 million metric tons per year of additional capacity in 2022.

With the expanded capacity, Drax also plans to double sales of biomass to third parties, reaching 4 million metric tons per year by 2030.  

Drax also noted its continued focus on cost reduction. In 2018, the company’s biomass production cost was $166 per ton. Efforts related to fiber sourcing, operational improvements and capacity expansion, including the acquisition of Pinnacle Renewable Energy Inc., allowed the company to reduce that cost to $141 per ton during the first half of 2021.

In its trading update, Drax discussed the status of current commissioning and expansion projects. The company announced good progress in integrating Pinnacle since its acquisition in April and said it is currently in the final stages of commissioning the pellet plan tin Demopolis, Alabama. That facility has capacity to produce more than 360,000 metric tons of wood pellets annually. In October, Drax commissioned a 150,000-metric-ton-per-year expansion at its LaSalle plant in Louisiana. The company also reported that a new 40,000-ton-per-year satellite plant located in Leola, Arkansas, is scheduled to be commissioned in December.