Commissioned reports

Flexible assets aligned with clean power 2030 

February 2025 – Electrification of the economy will drive a need for significant growth in generation capacity. The government’s Clean Power 2030 Action Plan sets out more than threefold increases in offshore wind and solar, a doubling of onshore wind, a five to sixfold increase in battery capacity, more interconnection capacity, and more long duration electricity storage. This is complemented by 2-7GW of low carbon dispatchable power, unabated gas running at low load factors, and a step up in flexibility on both the demand and supply sides.

November 2024 – Drax’s trading update signals better performance across the UK generation portfolio as recent low wind drives better volumes and price for flexible generation. This is a strong confirmation of the recent NESO report on achieving clean power by 2030 which highlights flexible generation including biomass and BECCS as essential to balancing more
intermittent renewables as these come onto the grid. We have adjusted our forecasts to reflect this and also better performance in the pellets business.

Post 2027 hydro EBITDA target is plausible

July 2024 – Increasing electrification of the economy and a shift to an electricity system with considerably more renewables will require increasing levels of electricity storage for system operability and security. Pumped storage hydro has a key role to play and there is policy backing for new capacity.   

March 2024 – Drax’s importance in the UK’s energy mix has been recently highlighted by the Government’s decision to rule out mothballing in the consultation on transitional support for the biomass units. We see this as emphasising a growing demand for the type of assets Drax has, with a multiyear pinch point likely in the second half of the decade where Drax can benefit from growing system balancing revenues. Drax is targeting at least £250m of recurring revenue from Flexible Generation and Energy Solutions post 2027 which our analysis suggests is very achievable. 

January 2024 – The consultation is out on bridging support for ROC funded biomass units including three units at Drax. Details of the final support package won’t be known until after the consultation closes and negotiations take place during 2024, but the very fact that this is being consulted on means support is likely at a level that will deliver a profit to Drax. Even if a final decision runs beyond any election, leaving such a significant amount of low carbon flexible capacity unsupported from 2027 would be a major risk to system security and this is recognised in the consultation paper. 

December 2023 – Today’s statement on Carbon Capture Utilisation and Storage confirms UK government support for the technology generally and represents progress towards support for Bioenergy Carbon Capture and Storage at Drax. In particular we see the recognition of world-leading economic benefits in the long term vision paper as important in building long term
support for BECCS at Drax.

March 2023 – We think the strong performance from the Drax pumped storage gives grounds for upside as it demonstrates the flexibility the company has across its GB portfolio. 

December 2022 – The mitigation of the Electricity Generator Levy to take account of exceptional fuel costs is clearly positive for Drax and reflects the need for policy to support dispatchable generation in an increasingly volatile energy system. 

August 2022 – The UK Government has published its consultation on supporting bioenergy carbon capture and storage (BECCS) in the UK. In doing so the Business Secretary Kwasi Kwarteng has reaffirmed that “The government is fully behind biomass energy to provide more power in  Britain, for Britain”. Additionally, the government is “minded to” bring in contract for difference (CfD) based support which we think plays to Drax’s strengths.