𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Energy company Drax is under investigation by the UK’s financial watchdog over the firm’s sourcing of wood for biomass pellets in the wake of whistleblower claims.

The London-listed group said the Financial Conduct Authority (FCA) probe covers more than two years, from January 2022 to March 2024, and will also look at compliance of Drax’s annual reports from 2021, 2022 and 2023 with rules over listing, disclosure and transparency.

Drax said it will “co-operate with the FCA as part of their investigation”.

Shares in the FTSE 250 firm fell 8% in morning trading on Thursday.

It follows accusations by Drax’s former head of public affairs and policy, Rowaa Ahmar, in March that the company had misled over its sourcing of wood for biomass pellets, which were made as part of her claim for unfair dismissal at an employment tribunal.

Drax denied her claims.

The firm and Ms Ahmar reached a settlement with Drax just over a week after the case opened.

Just weeks before the tribunal, the Government confirmed it would continue with new subsidies for Drax’s wood-burning power plant in North Yorkshire after the existing subsidy ends in 2027.

The major power station produces around 5% of the UK’s electricity and ministers said at the time that the plant was “important to delivering a secure, value-for-money power system”.

But the new arrangements will halve the subsidies paid to Drax and include a windfall mechanism that means that 30% to 60% of profits will be returned to consumers if they go above expected limits.

Drax would not be financially viable without the billions it has received in government subsidies for burning wood pellets, classed as renewable energy.

Environmental groups and campaigners have long called for an end to all subsidies for burning wood from forests and energy crops in power stations, redirecting the money to wind and solar instead.

Investigations by green groups have also alleged that Drax used wood from environmentally important forests around the world and the company has previously said it is confident its biomass is sustainable and legally harvested.