From 2017, Drax, the UK’s largest power station, will discontinue the ‘Green Shoots’ programme of direct farmer contracts to supply miscanthus and straw to the plant in North Yorkshire. Letters have been sent to more than 70 contracted miscanthus growers, inviting farmers to enter into a ‘Novation Agreement’, assigning their contracts to Terravesta, which has other end uses available.
While Terravesta acknowledges that the Drax decision is a blow to the sector, its confident there remains a robust and expanding market for UK miscanthus.
Growers entering into an agreement with Terravesta, taking effect from the 2017 harvest, are in a strong position. It’s our mission to keep developing viable opportunities for farmers, where demand for the crop is continually rising.
Terravesta and Drax have worked closely for a number of years, with Terravesta supplying miscanthus to Drax. Terravesta currently has a 12-year contract to supply the Brigg Renewable Energy Power Plant with 25,000 tonnes of whole bales annually – this year the price for a long term miscanthus supply contract is at £74.57 per tonne, delivered to Brigg. There is also another 10,000 tonnes going to fuel for biomass boilers and livestock bedding.
While we will honour existing Drax contracts, which were mostly for three years, we encourage growers to switch to long-term contracts, which offer terms on a par or slightly better than the Drax agreement, depending on location, and will put them in a robust position for the future.
We’re taking on more miscanthus growers to meet the uplift in demand and currently work with 220 farms on long term fixed price contracts with annual index-linked increases.
Investment in the future of the crop is gaining traction, with a multi-million pound funded project to see miscanthus hybrids grown from seed, rather than the traditional rhizome. This will mean cheaper establishment costs, higher yields, better returns, more markets and ultimately an excellent long term future for the crop.
We’re continually building the miscanthus market and make it our mission to look at new areas of growth, including miscanthus briquettes, for use as a building material, as a basis for bio-sugars and plastics, for example.
Terravesta will be in touch with growers to discuss the contract changes in due course, but if you have any questions in the meantime please get in touch: alexr@terravesta.com
