POWER plant operator Drax says losses of £11 million could have been dented by a further £30 million had it not burnt biomass in the first half of the year.
Reporting its half year results, for the six months ending June 30, the Selby-based group said a fall in pre-tax profits from £206 million in the first half of 2013 to a loss of £11 million in 2014 was largely due to increasing carbon tax costs.
However bosses say they remain optimistic as the expected drop in earning further demonstrates the firm's business case for converting from coal fired energy to biomass.
Drax has already converted two of its units to biomass, with plans to convert a third towards the end of next year. It said had the plant still operated wholly from coal it would have faced a further £30 million in carbon costs within the first half of the year.
Peter Emery, Drax production director, said: "If we hadn't converted the two units we had done our profits would have been down significantly more.
"We are seeing the basis for our business plan being proven. Investing in biomass is the right thing to do form the carbon perspective as coal burning is bearing more and more of the cost burden of omitting Co2.
"While we expected profits to drop a little we expect them to climb over the year and the year after.
"Investors are having to deal with the ambiguity over Government regulations, but they know the business case was originally accepted. They aren't in this for the short term and know this is a three year conversion project. We all knew profits would drop before they would go up.
"We would expect next year's numbers to be in parity, or ahead of this year."
In its half year results Drax saw a fall in earnings before interest, tax, depreciation and amortisation (EBITDA) to £102 million, down from £120 million a year ago.
However the group was marking a number of achievements including beating UK renewable energy outputs.
Mr Emery said: "For the first half of this year more than 20 per cent of Drax's output was from renewables.
"That compares to a UK energy output of 11 to 14 per cent.
"Our renewables output is growing all the time after the two unit conversions, and will go beyond 30 per cent next year. When we convert a third unit it will be on a path towards 50 per cent."