Energy firm Drax has suspended a £2 billion plan to build three wood-fired biomass power plants - citing uncertainties over government subsidies for the programme.
The company had hoped to prove the investment case for the first of three 290 MW plants in Yorkshire by the end of this year but has now ruled this out, despite being in advanced negotiations with a lead bidder to build the plant.
Last month the government guaranteed to supply 20 years of support for dedicated biomass plants at the rates that apply when the plant is commissioned.
But a review this October will set the rates from 2013, and as the plants would take more than three years to build Drax said it did not have the certainty to justify its investment.
Chief executive Dorothy Thompson said: “We do not believe it is possible to move forward with these investments in the absence of this clarity.
“We are urging the government to address this issue early in the next banding review and we hope for an early conclusion.
“We were originally targeting the end of 2010 to prove the investment case for our first plant; this is now not possible.”
The company expects to receive the government’s decision on planning applications submitted for two of the three plants in the second half of this year.
They are the Heron Renewable Energy plant at Immingham, South Humberside, and the Ouse Renewable Energy plant, to be built on land adjacent to Drax’s coal plant in Selby, North Yorkshire. They will be built in partnership with Siemens.
Drax said the procurement process for the contractor to build the first plant was continuing.
Each plant will create up to 850 jobs during the three-year construction period, as well as up to 150 local jobs through direct and contract employment opportunities once the plant is operational.
Drax owns and operates the coal-fired Drax Power Station in North Yorkshire.