Drax has won a High Court judgement against the government over subsidies for its power station units.
The company, presently converting its units from coal to biomass, said in April that the department of energy and climate change (DECC) had unexpectedly ruled its second unit was not eligible for a new - and higher - subsidy. This seemingly went against an initial decision.
Now the high court has ruled the second unit was indeed eligible for a so-called investment contract and the DECC ruling must be quashed and the matter resubmitted to DECC for reconsideration. DECC has been given leave to appeal. Analyst Angelos Anastasiou at Whitman Howard said:
This is a positive announcement, stating that the initial judgement deeming Drax's second unit ineligible for this subsidy must be quashed. If confirmed in the appeal, this would be good news for Drax, as on the day of the original announcement (23 April), Drax's shares fell 13.1% from 756.5p to 657.5p.
Following the court decision, Drax has jumped 36.5p to 716.5p.
