Roads to Resilience

market … [other companies] treated the SME market like domestic customers which they’re not, or they treated them like these big industrial and commercial customers which they’re not, [as] they don’t have procurement departments and accounts payable ” (Operations Director, Haven Power) and then since 2010 to larger Industrial and Commercial (IandC) businesses as well. This business has grown rapidly to over £450 million revenue and it now employs over 350 staff. Drax Biomass International is the wholly-owned US subsidiary that has been created to develop and operate manufacturing facilities for producing sustainable biomass pellets, which can be burnt in traditionally coal-fired boilers to displace coal.. The Drax Biomass International business is developing two wood pellet plants and a port facility in the South East US. The Drax Group can be said to: “ own one big power station … and I think that the strategic value of the power station makes a very big difference … we make sure the plant runs well and obviously we have to trade and sell the power … and in the future the biomass ” (Head of Risk and Corporate Finance). The Drax Power Station is a highly-complex plant, traditionally the generating units have processed and burnt coal, but they can also be modified to burn biomass. The age, size and complexity of the plant pose a challenge. However, the safety and production record of Drax Power is exemplary: in 2011, the lost time injury rate and total recordable injury rate were 0.08 and 0.10 respectively. This was achieved despite significant construction work that took place at the station during that year and the number of man-hours worked – some three million. The safety record of Drax Power Station compares very favourably with other companies in the energy sector and international benchmarks and Drax, “ are on the leading edge ” (Generation Manager). In addition to the challenge of safety, Drax needs to cope with being,“ at the mercy of what happens to power prices, to coal prices, to carbon prices and increasingly those are determined by international factors ” (Head of Risk and Corporate Finance). The challenges for Haven Power include growing the business, having a strong customer-focus, and dealing with risks. For example, “ in the SME world there are certain industries that we just won’t contract with that typically either have a risk of administration, or typically change hands a lot … [and] because debt problems arise ” (Operations Director, Haven Power). Two challenges for Drax Biomass International are building a secure and sufficient supply of biomass. This means that employees have, “ to go out and locate the project site, secure the permits around building a manufacturing facility, [and] understand logistics to transport the pellets ” (SVP Corporate Development). In doing this, “ physical, currency, [and] country risks are monitored, we’re constantly striving to get biomass from different countries … [and] the company is very aware of those risks ” (Head of Biomass Development). In addition, Drax is dependent on government: “ We are making this big transformation to biomass; this is underpinned by UK Government support … [because] biomass is a lot more expensive than coal … that is a risk: What happens if the financial crisis worsens? [Will the government support be secure?] ” (Head of Biomass Development). Business challenges

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Appendix A Case study: Drax Group