FCA closes investigation into Drax over biomass sourcing

Generator’s shares rise as regulator finds no evidence of misleading statements about fuel’s sustainability

The City watchdog has closed an investigation into the power generator Drax after an almost 10-month review into the sourcing of wood pellets for its biomass station.

The Financial Conduct Authority said it had “reviewed thousands of pages” but that it “did not find evidence that justified any further action”.

The regulator began the investigation last year amid concerns that Drax, which operates its eponymous power plant in Selby, North Yorkshire , had made misleading statements to the market about the origins of its biomass fuel.

Drax, which operates the UK’s biggest biomass power station, imports millions of tonnes of wood pellets from across the Atlantic every year and burns them to generate electricity.

It argues that this biomass provides reliable renewable electricity and can help the UK’s transition away from fossil fuels. It has received billions of pounds in government subsidies to help hit national carbon-cutting goals. In 2025, it received £999m for generating about 4.5% of Great Britain’s electricity from its plant , according to the climate thinktank Ember.

However, there have been persistent claims from campaigners and scientists that the pellets it burns are not sourced sustainably and may be increasing carbon emissions.

In 2024, Drax agreed to pay £25m to a redress scheme after the energy watchdog Ofgem found it had failed to put “adequate data governance and controls in place” when reporting details of the type of wood historically sourced from Canada.

The regulator found at the time that there was no evidence to suggest the breach was deliberate, and said instead that it was “technical in nature”. It also found no evidence that the biomass sourced was unsustainable or that Drax had wrongly laid claim to renewable energy subsidies.

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.”

The Drax chief executive, Will Gardiner, said in a statement that the company recognised the importance of compliance with its regulatory obligations and that it had “worked constructively with the FCA throughout this investigation”.

“We are pleased to see the investigation closed with no action being taken,” he added.

Shares in Drax, which are listed in London, rose by 1.2% in early trading on Thursday. The stock fell sharply when the FCA investigation opened last August.