Power company Drax has told investors it expects full year earnings to be more than £1bn thanks to strong performance across its electricity and biomass pellet production business.
Bosses at the firm, which operates the UK’s largest biomass plant at Selby, said they expect full year Ebitda to come in at the top end of estimates of between £993m to £1.04bn. Drax said it had performed well across its flexible generation and pellet production businesses – both of which are targeting recurring adjusted Ebitda of £250m from 2027.
The firm also pointed to £3.2bn of contracted forward power sales between 2024 and 2026 of its Renewables Obligation (RO) biomass, pumped storage, and hydro generation assets – representing 27.5 terrawatt hours (TWh), with a further 6.1TWh of Contracts for Difference generation contracted for 2024 and 2025.
As Drax awaits the outcome of a Government consultation on potential bridging mechanisms to bioenergy carbon capture and storage, it pointed to other pipeline opportunities including supply of power to data centres and the potential to locate biomass power generation at data centre sites. And in September the group launched an international carbon removals business called Elimini which has a global headquarters in Houston, Texas.
Drax Group CEO Will Gardiner said: “We continue to deliver a strong operational performance, supporting the UK energy system with dispatchable, renewable power, keeping the lights on for millions of homes and businesses, while supporting thousands of jobs throughout our supply chain. Our flexible generation and pellet production businesses are making good progress towards our target to deliver post 2027 recurring Ebitda over £500m and we are continuing to develop options for growth, while remaining disciplined on capital allocation.
“The UK Government aims to deliver a clean energy system by 2030, and NESO’s Clean Power 2030 report shows that large-scale biomass, BECCS and flexible generation are included in both pathways. We are excited to be a part of that process. Our investment in BECCS remains contingent on gaining further clarity from UK Government on the frameworks for continuing the operation of the power station beyond 2027 and supporting BECCS conversions from 2030.
“Subject to the right investment framework and milestones, Drax will develop its options for BECCS and pumped storage hydro which could create thousands of new jobs and private investment into green energy projects in both Yorkshire and Scotland. We believe that biomass has a growing role to play in the energy transition, such as in the production of SAF. We have also launched our new Elimini carbon removals business which aims to develop projects providing 24/7 power and carbon removals outside the UK, offering long-term investment opportunities in what we believe could be a major new global market.”
Original artice – https://business-live.co.uk/all-about/yorkshire-humber
