NEW subsidies were announced for the wood-burning power plant Drax yesterday, with the government claiming the new deal will halve consumer costs and improve sustainability.

The Yorkshire-based power station, which produces around 5 per cent of Britain’s electricity, was due to see its subsidies expire in 2027.

Ministers confirmed that Drax will remain part of the energy system until at least 2031, describing it as “important to delivering a secure, value-for-money power system.”

But they acknowledged that it cannot be allowed to operate the way it has until now, or with the level of subsidy it received in the past, which enabled Drax to make “unacceptably large profits.”

In a written statement, Energy Minister Michael Shanks said Drax would switch from being a baseload electricity generator, running about two-thirds of the time, to only operating as “dispatchable power.”

This means it will only run when it is really needed, allowing wind and solar to be prioritised when they are available.

Drax Group chief executive Will Gardiner said the new framework was an “investment in Britain’s energy security, which will result in a net saving for consumers.”

But Greenpeace UK policy director Dr Doug Parr said continuing to subsidise biomass imports is “a dirty compromise with past failures.”

“Trees should be left to grow and not be burnt in a major subsidy-fuelled bonfire,” he said, warning that commitment to Drax could become more of a “stranded” asset as the energy market develops.

“The new criteria should, hopefully, limit the damage done both by restricting its operations and reforming its supply chain, but the government is still far too trusting of big polluters asking for big subsidies to decarbonise.

“We have cheap, clean power sources available, and we shouldn’t be left to gamble on schemes like this any more.”