DRAX Power has scrapped plans to build a new dedicated biomass plant at its existing power station site near Selby.

The Government gave the go-ahead in August to £2 billion plans for two new power plants, which would burn raw materials such as straw and willow.

They included a 299 megawatt (MW) biomass-fuelled power station on a six-hectare site between Barlow and Long Drax, adjacent to Drax’s existing power station and another plant at the port of Immingham.

The two plants were each expected to create 600 jobs during construction, and 150 jobs once operational.

In its preliminary results for the year ended December 31, Drax Power announced that it would not be continuing the plans for the dedicated biomass plant in Selby although it is continuing to look at the plant in Immingham because its freight costs from the port would be lower.

Peter Emery, production director at Drax, said the Government was showing more support for co-firing – burning both biomass and coal – than for large dedicated biomass plants and the proposed Government subsidies would not make the plant “economic”.

It plans instead to invest £50 million this year in more storage at its existing site so it can increase its co-firing capacity from 12.5 per cent to 20 per cent to enable it to benefit from enhanced co-firing support, which under current proposals from Government require recipients to have 15 per cent co-firing capacity.

The Government is expected to announce in April what the subsidies for renewables will be and Mr Emery said that further investment would be dependent upon the results.

He said the investment would increase employment at the plant, but the level of investment was dependent upon the Government subsidies.

He said the development of the existing plant could potentially “dwarf” the numbers of jobs expected to have been created in the stand-alone plant.

He said: “It could be the first step to a major change depending on how the government consultation pans out. We can do more at Drax and could move towards 50 per cent co-firing.”

Nigel Adams, MP for Selby and Ainsty, said: “I would have loved to have seen a dedicated biomass site at Drax and it looks as if Drax’s loss will be Immingham’s gain, but Drax Power are still committed to investing tens of millions of pounds in biomass and enhancing the plant at Drax.”

Eggborough Power Station, also in the Selby area, is still planning to convert wholesale from coal to biomass.