Drax considers major data centre next to Britains largest power station

Drax Group is exploring the development of a significant data centre beside Britain’s largest power station, as it aims to meet surging electricity demand driven by artificial intelligence. The FTSE 250 company has announced preparations for a planning application covering an initial 100 megawatt facility adjacent to its North Yorkshire power plant, which currently generates about five percent of the nation’s electricity.

The proposed data centre would make use of existing grid connections to supply energy either from the grid or directly from Drax’s own operations, subject to government approval and the terms of its subsidy arrangement. Drax has indicated that while the initial project would source up to 150 megawatts using available capacity, it is also examining long-term options to support a centre of more than 1 gigawatt, potentially ranking it among the largest data sites globally.

With a long queue of new data centre projects awaiting connection to Britain’s grid, industrial brownfield sites such as Drax’s are increasingly attractive to developers. Some redundant cooling towers at the site, left after coal units were closed, could be repurposed to provide efficient cooling solutions for data infrastructure.

Drax expects the site will likely be developed and operated by a third party, although joint ventures remain under consideration. The government this year extended renewable energy subsidies for Drax’s biomass operation until March 2031, though on more restrictive terms. During this period, a mechanism has been established allowing up to 500 megawatts to be directed to data centre use, pending government agreement and oversight on value for consumers, sustainability, and security of supply.

The initiative forms part of Drax’s wider strategy, underpinned by a target of three billion pounds in free cash flow by 2031. The group envisages allocating at least one billion pounds to shareholder returns and up to two billion pounds for strategic growth investments, which has buoyed investor sentiment and resulted in a modest share price increase.

Drax’s conversion from burning coal to importing wood pellets, primarily from the United States and Canada, has been the focus of considerable debate. While initially classified as renewable, concerns have grown over the true environmental benefits of biomass. Critics argue that immediate carbon release from burning wood is not offset quickly enough by new growth, raising questions about the plant’s overall climate impact.

Despite contention over its carbon credentials, government priorities around national energy security led to subsidy extensions. With AI and digital infrastructure now seen as growth drivers, Drax’s future may increasingly depend on partnerships with technology firms and the potential expansion of carbon capture technology to support a claim to carbon negative energy generation. This would position the company as a premium power supplier to the next wave of British data centres.