Drax Group Plc, the UK-based operator of the Drax biomass-fired power station, is exploring the potential of supplying power to data centres as part of its strategy to expand into new markets. The company outlined this opportunity in a performance update ahead of its full-year results, scheduled for release in February.
The increasing demand for continuous power to meet the needs of data centres has opened up new avenues for energy generators like Drax. The company has indicated positive discussions with data centre providers regarding the possibility of co-locating data centres with its biomass generation facilities.
Drax expects its 2024 adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) to be at the upper end of analysts' expectations, projecting GBP 1.004 billion (USD 1.29 billion/EUR 1.21 billion). The forecast is based on strong performance across its key business segments, including Flexible Generation, Pellet Production, and Biomass Generation.
CEO Will Gardiner highlighted the company's progress toward its long-term goals, noting that Drax's Flexible Generation and Pellet Production businesses are on track to achieve post-2027 recurring EBITDA of over GBP 500 million. The company continues to develop growth options while maintaining a disciplined approach to capital allocation.
Drax is also in ongoing discussions with the UK government about a transitional mechanism for large-scale biomass generators as they move from current renewable schemes to bioenergy with carbon capture and storage (BECCS) after 2027. Gardiner emphasized that the company's investment in BECCS is contingent on clarity from the government regarding the future of the power station and support for BECCS conversions starting in 2030.
Gardiner also noted that, with the right investment framework, Drax could invest in BECCS and pumped storage hydro projects, potentially creating thousands of new jobs and attracting private investment in green energy initiatives in Yorkshire and Scotland.
