Publication of Circular and Notice of General Meeting in relation to proposed acquisition of flexible, low-carbon and renewable UK power generation from Iberdrola
British energy business Drax Group contributed almost £1.7 billion towards UK GDP in 2016 and supported over 18,500 jobs across the country. The findings were revealed in a new report looking at the economic impact of Drax’s UK operations, which includes Drax Power Station – a nationally significant energy asset that provides power to six million homes.
Researchers at Oxford Economics found that Drax Group’s contribution to the British economy has increased by 34% year-on-year following the Group’s acquisition of Opus Energy, a large retail company which supplies energy to businesses.
Based on Drax’s operations in the energy sector and its use of British businesses across its supply chain, the report estimates that the company contributed £1.67 billion to the economy and supported 18,500 jobs last year, a rise from 14,150 in 2015. The vast majority of this impact is felt outside London and the South East – of the £1.67bn Gross Value Added by Drax Group only £155m was in London, meaning 90% of the Group’s economic impact was experienced outside of the capital.
Employment supported by Drax’s activities covered a wide range of sectors including high-skilled manufacturing of industrial components, engineering and technical machinery, construction, IT, professional business services and transport.
Researchers at Oxford Economics used three measures to calculate Drax’s GDP contribution: the economic activity associated with the day-to-day running of the business; the activity created by the purchase of goods and services from its suppliers; and the wages the company’s employees and suppliers’ employees spend in their local area.
A breakdown of the GDP generated by Drax Group shows all regions of the UK benefited. Highlights include:
- £419 million created in Drax’s heartland of Yorkshire and the Humber, where its power station is located.
- 760 jobs for the North East and £59m contributed to the local economy.
- £232 million generated in the East of England, where one of Drax Group’s business retail suppliers, Haven Power, is based.
- 1,600 jobs supported and £130 million generated in Wales, the home of Drax Group’s recently acquired business retail supplier, Opus Energy’s Cardiff offices
- 900 jobs supported in Scotland and £76 million generated in its economy.
- 950 jobs sustained and £83 million contributed to GDP in the South West.
Drax Group CEO, Dorothy Thompson, said: “As a British energy company, we are committed to working with UK businesses right across our supply chain. This report shows that Drax now supports more than 18,500 jobs across the UK and with our new business strategy in place, we believe we will boost this number further.
“With the power station’s sophisticated supply chain and our growing retail business, we are making a positive economic contribution in every region of the UK. We are an important player in an energy sector that is crucial to delivering a low carbon economy as part of the Government’s wider Clean Growth Strategy for the country.
“Since upgrading half of the power station to use sustainable biomass instead of coal, Drax is the UK’s biggest single site generator of renewable power – producing enough for four million households.
“We are also exploring options for a coal-free future, including the repowering of our remaining coal generating units either to biomass or to gas, with battery storage of up to 200MW.
“If developed these options for gas and battery storage show how we could upgrade our existing infrastructure to provide capacity, stability and essential grid services, as we do with biomass.
“This will allow more renewable energy sources onto the system, paving the way for increased carbon savings across the UK as a whole and helping us to meet the government’s ambitions for a coal-free system by 2025.”
Osman Ismail, Senior Economist at Oxford Economics, said: “Drax Group makes an important economic contribution to Yorkshire and the Humber, and the UK more widely. Its activities generated almost £1.7 billion in GDP last year, and sustained thousands of jobs across the nation.
“In addition, the implementation of the Group’s new strategy means that Drax is uniquely placed to impact the wider challenges for the UK’s energy system through helping to balance the Grid.
“The Opus Energy acquisition solidifies Drax’s principal activities of generating energy and supplying energy services to businesses and directly impacts a number of different regions in the UK in terms of both job creation and contribution to GDP.”
Full details of the study can be found at draximpact.co.uk
Regional press releases:
Notes to editors:
About Drax Group
Drax Group plc plays a vital role in helping change the way energy is generated, supplied and used as the UK moves to a low carbon future. Drax operates the largest power station in the UK, based at Selby, North Yorkshire and supplies 7 percent of the country’s electricity needs. The energy firm converted from burning coal to become a predominantly biomass-fuelled electricity generator. Drax is the biggest single site renewable generator in the UK and the largest decarbonisation project in Europe. Its 2,300-strong staff operate across three principal areas of activity – electricity generation, electricity sales to business customers and compressed wood pellet production.
The Group includes:
Drax Biomass, based in the US and manufactures compressed wood pellets produced from sustainably managed working forests.
Haven Power, based in Ipswich, providing businesses with electricity.
Opus Energy, based in Oxford, Northampton and Cardiff, providing electricity and gas to businesses. The Opus Energy acquisition was part of the company’s new business strategy, which focuses on providing greater flexibility to the country’s electricity grid, to complement the rise in generation from intermittent renewables such as wind and solar, as well as diversifying earnings through its retail businesses and helping companies in the UK to be more sustainable
Billington Bioenergy, based in Liverpool with depots across the UK, is one of the leading distributors of wood pellets for sustainable heating in the UK.
For more information visit www.drax.com
About Oxford Economics
Oxford Economics was founded in 1981 as a commercial venture with Oxford University’s business college to provide economic forecasting and modelling to UK companies and financial institutions expanding abroad. It is now one of the world’s foremost independent global advisory firms, providing reports, forecasts and analytical tools on 200 countries, 100 industrial sectors and over 3,000 cities. Its best-of-class global economic and industry models and analytical tools give an unparalleled ability to forecast external market trends and assess their economic, social and business impact.
About the study
Oxford Economics assessed the economic benefits of Drax Group using a standard means of analysis, called an economic impact assessment. This approach is applied in each of the three stages of the study.
The full report can be viewed here: draximpact.co.uk/public/Oxford_Economics-Economic_impact_of_Drax_in_the_UK_2016.pdf