By: The Working Forest Staff
B.C.-based Pinnacle Renewable Energy is being taken over by British-based Drax Power Ltd., the latest sign of an international push to low-carbon energy production.
Drax has agreed to pay $385 million for Pinnacle in a bid for its shares that has been endorsed by Pinnacle’s board and its largest shareholder. Drax operates the Drax Power Station in Yorkshire in northern England, a former coal-fired plant that has converted to biomass. It supplies about five percent of Britain’s electricity, and Drax says it is the largest decarbonization project in Europe.
Pinnacle fits with Drax’s objective to increase its own pellet supply, and its existing export contracts with Mitsubishi of Japan and other Asian buyers are also interesting to the company as the world shifts to low-carbon energy, Drax CEO Will Gardiner says. The U.K. government has incentive programs that run until 2027 to pay above-market rates for power produced by wind, solar, and biomass.
“One of the things that’s critical for us is that we want to increase our self-supply,” Gardiner said in an interview with Black Press Media on Feb. 8. “We want to bring down the cost of biomass power generation, so we can run beyond 2027 if that regime is not renewed.”
The U.K. now has a legislated commitment to reach “net-zero” greenhouse gas emissions by 2050, and Drax has a plan to go beyond carbon neutral by adding carbon capture and storage to its operation.
“We’re actually moving to the next step, which is delivering not only carbon-neutral power, but carbon-negative power,” Gardiner said. “In the U.K the government thinks they’ll need about 15 million tonnes of negative emissions in 2050 to get to net-zero.”
Drax already has wood pellet plants in the southern U.S., a direction followed by Pinnacle under CEO Duncan Davies, who led U.S. expansion of Interfor Corp. during his time as CEO of that company.
With the completion of a pellet facility at Demopolis, Alabama, expected by mid-2021, Pinnacle’s production outside of B.C. is expected to grow to 44 percent of the company’s pellet volume. The latest U.S. plant brings its capacity to 2.8 million metric tonnes per year.