The Financial Conduct Authority (FCA) has closed its investigation into power generator Drax after an almost 10-month review of the sourcing of wood pellets for its biomass power station. The regulator stated that it had "reviewed thousands of pages" but "did not find evidence that justified any further action."
Background of the Investigation
The FCA launched the investigation last year amid concerns that Drax, which operates the Drax power station in Selby, North Yorkshire, may have made misleading statements to the market about the origins of its biomass fuel. Drax imports millions of tonnes of wood pellets from across the Atlantic annually and burns them to generate electricity. The company argues that this biomass provides reliable renewable electricity and aids the UK's transition away from fossil fuels. It has received billions of pounds in government subsidies to help meet national carbon-cutting goals. In 2025 alone, Drax received £999 million for generating about 4.5% of Great Britain's electricity from its plant, according to the climate thinktank Ember.
Campaigner Concerns
Campaigners and scientists have persistently claimed that the wood pellets burned at Drax's power plant are not sourced sustainably and may increase carbon emissions. In 2024, Drax agreed to pay £25 million after energy watchdog Ofgem found that it had failed to put "adequate data governance and controls in place" when reporting details of the type of wood historically sourced from Canada. At that time, the regulator found no evidence to suggest the breach was deliberate, describing it as "technical in nature." It also found no evidence that the biomass sourced for the power plant was unsustainable or that Drax had wrongly claimed renewable energy subsidies.
FCA Statement
The FCA said on Thursday: "Our focus was on areas within our remit, specifically whether Drax's annual reports and accounts between 2021 and 2023 contained misleading statements or left out important information investors needed to know. Accurate reporting is crucial to the integrity of our markets, and vital so investors can make informed decisions. Where evidence supports proportionate action, we take it. Where it does not, we close cases as swiftly as possible."
Drax Response
Drax chief executive Will Gardiner said in a statement that the company recognized the importance of compliance with its regulatory obligations and had "worked constructively with the FCA throughout this investigation." He added: "We are pleased to see the investigation closed with no action being taken."
Market Reaction
Shares in Drax, listed in London, rose by 1.2% in early trading on Thursday. The stock had fallen sharply when the FCA investigation opened last August.
