DRAX Power has said it cannot move ahead with £2 billion plans to build new dedicated biomass plants.

The operators of Drax Power Station, near Selby, announced in its half-year results to June 30 that the plans had been put on hold until the Government can give more clarity on the extent of subsidy the plant will receive.

Drax was expected to start construction later this year on plans to build three 290MW biomass-fired renewable energy plants in partnership with Siemens Project Ventures.

It already obtained planning permission for one of the £700 million plants on a six-hectare site between Barlow and Long Drax, adjacent to its existing power station. The Ouse Renewable Energy Plant would create enough power for 500,000 homes and about 150 permanent jobs.

The construction of the plant was expected to create a further 850 jobs.

A second had been planned for a site at the Port of Immingham.

Drax has been lobbying the Government for “grandfathering” support, which would mean it provides financial support for dedicated biomass plants over their lifetime.

The Government committed to providing 20 years of grandfathering support in its Annual Energy Statement on July 27, but the rate of support is revised every four years, with new rates coming into effect in April 2013.

Chief executive Dorothy Thompson said the plants would take three years to build and as such would not be commissioned before this date. “There is, therefore, no clarity today on the level of (Government) support that these plants will receive.

“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 particular issue early in the next banding review and we hope for an early conclusion.”

The company increased revenue to £780.6 million in the six months ending June 30, 2010, compared to £706.9 million in 2009, and increased pre-tax profit to £132.2 million, from £33.8 million in 2009.

Drax completed an £80 million investment in a co-firing plant, in which biomass materials are blended and burned with coal, in June.

But the plant is not running to full capacity because co-firing receives only a quarter of the Government support available to offshore wind, which the business said makes it uneconomic.

“We’re frustrated. We would like to move with greater speed on this,” Mrs Thompson told stakeholders at a presentation of the company’s results.