Earnings are up 24 per cent to £225 million at Drax as it prepares for major investment in carbon capture and storage, while furthering its biomass operations.
The company has immediately made up the £21 million EBITDA shortfall from the sale of its gas-fired generation assets to VPI, and is forecasting to drive down debt further by the end of the year, while providing a “sustainable and growing dividend “ to investors.
Commenting on the first half trading, Will Gardiner, chief executive, said: “As the UK’s largest generator of renewable power by output, Drax plays a critical role in supporting the country’s security of supply. We are accelerating our investment in renewable generation, having recently submitted planning applications for the development of BECCS at Drax Power Station and for the expansion of Cruachan Pumped Storage Power Station.
“As a leading producer of sustainable wood pellets we continue to invest in expanding our pellet production in order to supply the rising global demand for renewable power generated from biomass. We have commissioned new biomass pellet production plants in the US South and expect to take a final investment decision on up to 500,000 tonnes of additional capacity before the end of the year.
“As carbon removals become an increasingly urgent part of the global route to Net Zero, we are also making very encouraging progress towards delivering BECCS in North America and progressing with site selection, government engagement and technology development.
“In the UK and US we have plans to invest £3 billion in renewables that would create thousands of green jobs in communities that need them, underlining our position as a growing, international business at the heart of the green energy transition.”
Expectations for full year profit of £290 million to £310 million remain unchanged “which reflected optimisation of biomass generation and logistics to support UK security of supply this winter when demand is high”. It includes £120 million from the sale of the open cycle gas turbine division to VPI.
Total pellet production is up 54 per cent to two million tonnes as new facilities have been bolted on and optimisation programmes have delivered.
Having agreed with government to extend coal operations as a winter contingency to March 2023, Drax has underlined how it remains committed to closure and development of BECCS, with no change to the expected timetable.
British Steel has signed an agreement to explore the opportunity to deliver 13,000 tonnes of steel for the huge build.