British power generation giant Drax has lifted its annual profit forecast, capitalising on reduced wind farm output across the UK energy network. The North Yorkshire-based enterprise anticipates adjusted earnings to reach the upper threshold of market analysts’ projections, ranging between £993 million and £1.04 billion.
The improved outlook stems from heightened demand for both its biomass-fuelled power stations and pumped hydro storage facilities. The company’s biomass plant has secured contracted power sales of 11 terawatt hours for the current year, with future commitments of 9.7 TWh and 6.8 TWh for the subsequent two years.
These projections incorporate a £25 million regulatory penalty from Ofgem, imposed due to inaccurate sustainability reporting regarding wood pellet sourcing. The company must now resubmit data concerning forestry types and saw-log proportions utilised in its operations. An additional £7 million has been allocated to address historical overcharging at its recently divested Opus Energy smart metering division.
Looking ahead, Drax aims to generate adjusted earnings exceeding £500 million by 2027, with over £250 million expected from its pellet production segment. The company’s ambitious £2 billion investment in Biomass Carbon Capture and Storage (Beccs) technology hinges on governmental clarity regarding support beyond 2027, according to Chief Executive Will Gardiner.
The FTSE 250 constituent has initiated its £300 million share buyback programme, resulting in a 4.5 per cent share price increase to 671p during London trading. Despite environmental scrutiny and regulatory challenges, Drax maintains its position as a crucial contributor to the UK’s energy security, providing approximately 4 per cent of the nation’s electricity.
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