DRAX chief executive Will Gardiner, has said the energy giant could invest around £500 million in expanding the Cruachan ‘hollow mountain’ hydro power plant in Argyll in a development that would provide work for around 1,000 people.
Mr Gardiner underlined Drax’s belief in the potential value of the Cruachan two development maintaining it could play a key role in the energy transition with relatively limited impact on the landscape.
The expansion would allow Drax to make the most of the infrastructure already in place at Cruachan, which opened in 1965 following a six year construction process that involved 1,300 workers who were known as “Tunnel Tigers”.
The pumped storage hydro plant features a turbine hall hollowed out from Ben Cruachan. The turbines are driven by water that is funnelled from a reservoir in the hills to Loch Awe below.
Water can be pumped back up to the reservoir at times when demand for power is relatively low.
“One of the things that’s quite nice about Cruachan two relative to other pumped storage projects is that we don’t really have to change the landscape in any way, “ Mr Gardiner told The Herald.
He added: “We already have the reservoir at the top, the loch at the bottom and will just be building another turbine hall in the middle of the hollow mountain.
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“There will be disruption during the building phase, it’s a big project but once it’s done effectively you wouldn’t be able to notice any difference to what things look like today.”
In a sign of Drax’s enthusiasm Mr Gardiner said the company planned to start building work on Cruachan two in 2024.
The work would probably employ around 900 people for much of the second half of the 2020s.
Mr Gardiner said the company has had a positive response to its proposals in the consultations it has conducted in the area.
He underlined the importance of Cruachan in the strategic plans of Drax, noting the company expects to be a major player in the energy transition in the UK and overseas.
Drax reckons Cruachan can play a key part in maximising the potential of renewable energy by storing power that is generated by assets such as windfarms at times of low demand for energy.
“We will need a lot more long duration storage, something that can store power for hours as opposed to minutes and pumped storage is a great way to do that,” said Mr Gardiner.
He noted: “There was a study done in 2020 that effectively said that in 2020 there was enough renewable power for a million homes that was wasted because effectively there was not enough storage capacity to do that.”
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In the annual results statement the group issued yesterday Drax said if it made a final investment decision on Cruachan two in 2024 the development would be expected to be operational by 2030.
It said any investment decision regarding Cruachan two “will depend on the right regulatory support”.
Mr Gardiner said the group would require assurance that it would generate reasonable returns on what would be a very big investment with energy markets likely to remain volatile.
Mr Gardiner suggested the Government could use a cap and collar scheme to provide the required support. Under such a scheme it would pay Drax if returns fell below the agreed minimum.
Drax would pay the Government if returns exceeded the agreed maximum.
Drax acquired Cruachan with a £700m portfolio it bought from ScottishPower in 2018.
The portfolio also included the Lanark and Galloway river-based schemes and a plant at Daldowie near Glasgow that produces fuel pellets from sludge. Mr Gardiner said Drax was pleased with the performance of these assets.
Drax generated £68m underlying profit from its Scottish assets last year, compared with £73m in the preceding year.
Total group underlying earnings fell to £398m from £412m.
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Drax produces energy from biomass at the formerly coal-fired plant in Yorkshire from which it takes its name.
The group said the fall in earnings last year principally reflected a major planned outage on one biomass generation unit at Drax Power Station, adding: “In the context of that outage, we believe this was a strong performance.”
The group is working on plans for a huge carbon capture and storage complex which will include the power station.
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