UK biomass generator Drax eyes data centre demand for 24/7 power

UK’s Drax Group Plc (LON:DRX), operator of the eponymous biomass-fired power station, on Tuesday said it sees potential in supplying power to data centres as it updated on the company’s performance ahead of reporting full-year results in February.

According to the company, the growing demand for 24/7 power to meet the needs of data centres offers a potential opportunity for generators like itself. Drax said it has received positive engagement with data centre providers regarding the possibility of co-locating a data centre with biomass generation.

The company told the market it expects its 2024 adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) to be around the top end of analysts’ consensus estimates, which project GBP 1.004 billion (USD 1.29bn/EUR 1.21bn), with a range of GBP 993 million to 1.039 billion. This is thanks to continued strong performance across the business, including Flexible Generation, Pellet Production and Biomass Generation.

“Our Flexible Generation and Pellet Production businesses are making good progress towards our target to deliver post 2027 recurring EBITDA over GBP 500 million and we are continuing to develop options for growth, while remaining disciplined on capital allocation,” said CEO Will Gardiner.

Drax continues to engage with the UK government regarding a transitional mechanism for large-scale biomass generators moving from their existing renewable schemes in 2027 to bioenergy with carbon capture and storage (BECCS).

“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,” the CEO said.

“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," Gardiner added.

(GBP 1 = USD 1.288/EUR 1.209)

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