In its latest report, the cross-party Secondary Legislation Scrutiny Committee raised red flags over draft legislation, that would bring existing biomass plants into the Contracts for Difference (CfD) scheme from 2027 to 2031.
This includes Drax in Yorkshire, the nation’s largest biomass generator, which already produces around 5% of the country’s electricity by burning imported wood pellets.
The CfD scheme, funded through energy bills, guarantees a fixed price for low-carbon electricity.
But the Committee questioned whether Drax’s inclusion would deliver value for money, since it would be paid more per unit than other forms of renewable energy.
Peers also voiced doubts over the strength of the proposed sustainability checks. While new rules include tougher criteria, the Committee said the compliance regime is still too weak.
It pointed to a damning Ofgem report earlier this year that found Drax had poor data governance, leading to a £25 million redress payment.
A separate review of Drax’s supply chain by KPMG remains unpublished, fuelling further concerns about transparency and oversight.
Baroness Lea of Lymm, Member of the Secondary Legislation Scrutiny Committee, said:
“Given that there are serious concerns about the sustainability and value for money of large-scale biomass electricity generation in the UK and about Drax’s compliance record, we are concerned whether the new arrangements will be robust enough to enable Ofgem and the Department to hold Drax to account.
“Moreover, the new strengthened sustainability criteria will only apply to the electricity that Drax generates under a contracts for difference (CFD) agreement. It is not clear to us which environmental standards will apply to the electricity generated by Drax outside the CFD scheme, and how any sustainability standards outside the CFD agreement will be enforced.”
The Committee was also critical of the Explanatory Memorandum accompanying the regulations, accusing the Department for Energy Security and Net Zero of failing to make clear that Drax would be the biggest and most immediate beneficiary.
Since 2002, Drax has already received around £6.5 billion in public support.
With existing subsidy schemes due to end in 2027, ministers say the new measures are aimed at protecting security of supply.
But critics argue that locking in long-term support for biomass at a premium price, without robust safeguards, risks pushing up bills and undermining trust in the energy transition.
