Tag: sustainable biomass

Trading Update – supporting the UK power system with reliable and renewable energy

30 April 2026

Financial News

RNS Number: 4793C
Drax Group plc
(“Drax” or the “Group”; Symbol:DRX)

Highlights

  • Good operational performance across the Group
  • Full year 2026 expectations for Adj. EBITDA(1) in line with consensus estimates(2)
  • £450m buyback – first £75m tranche complete, second £75m tranche to commence May 2026
  • Final dividend of 17.4 pence per share, subject to shareholder approval at today’s AGM
  • Flexitricity acquisition complete

Drax Group CEO, Will Gardiner, said: 

Will Gardiner, Drax Group CEO

“We have started the year well and have delivered a good operational performance across the Group, supporting UK energy security at a critical time for the country. Our assets, colleagues and supply chain partners have been working hard to help keep the lights on for millions of UK households and businesses through a period of acute geopolitical uncertainty.

“We are at a key moment of transition in our business and in the UK’s energy system. With our first battery storage projects and the commissioning of our first OCGT unit progressing, we are growing our UK FlexGen portfolio.

“We are excited about the potential opportunities to invest further to help the country meet its growing energy needs. We believe these opportunities could create value for stakeholders and offer attractive returns for shareholders, in line with our capital allocation policy.”

Full year expectations

Drax continues to expect 2026 full year Adj. EBITDA to be in line with consensus estimates(2). Full year expectations remain subject to continued good operational performance.

Impact of conflict in the Middle East

The Group’s focus on flexible, dispatchable generation and renewables enables it to support a secure, lower cost UK power system, which can continue to decarbonise, by allowing more intermittent renewables to operate and helping to reduce the UK’s exposure to higher gas prices and reliance on imported power.

The Group produces on average over 5% of the UK’s electricity and around 10% of its renewable power, up to 18% at times of peak demand and on certain days over 50%(3). The Group’s supply chain has a high level of operational redundancy, with limited exposure to underlying commodity prices, sourcing biomass primarily from North America, including from the Group’s own facilities in the US South.

To help maximise output at times of high demand, the Group is continuing to optimise generation across its portfolio to deliver power when it is needed most.

Regulatory update

In April 2026, the UK Government announced its intention to remove the UK Carbon Price Support (CPS) mechanism from April 2028, which has been used over the last decade to encourage a reduction in fossil fuel use, contributing to the phase out of coal generation from the UK power system. The change to CPS does not change the Group’s expectations.

In January 2023, the UK Government introduced the Electricity Generator Levy (EGL) in response to higher wholesale power prices. In April 2026, the Government announced an extension of the scheme beyond March 2028 and an increase in the levy. Drax does not currently expect to pay any EGL in 2026 and does not expect it to have any impact on Adj. EBITDA in 2026. From April 2027 Drax Power Station will operate under a CfD agreement which is not subject to the EGL.

FlexGen

Pumped Storage – Cruachan Power Station

Units 1 and 2 are continuing to perform well, providing flexible power generation and a wide range of system support services.

An investment to refurbish and upgrade two units is progressing, with units 3 and 4 undertaking a planned outage programme through 2026 and 2027. The project is underpinned by a 15-year Capacity Market agreement worth over £220 million(4) (c.£15 million Adj. EBITDA pa) and will add 40MW of additional capacity and improve unit operations.

In late December 2025, a grid connection failure caused by assets owned by Scottish Power Energy Networks (SPEN) has resulted in an ongoing forced outage on units 3 and 4. SPEN is working with Drax to restore the connection.

Open Cycle Gas Turbines (OCGTs)

Drax expects to assume control of Hirwaun Power Station (Hirwaun), in South Wales, shortly. Hirwaun is the first of three 299MW OCGT plants which Drax is developing in England and Wales.

Battery Energy Storage System (BESS)

In March 2026, Drax completed the acquisition of Flexitricity, an optimiser of flexible energy assets, with a scalable platform expected to support the Group’s ambition to develop a GW scale pipeline of BESS opportunities. Flexitricity’s capabilities complement acquisitions and agreements put in place by Drax between October 2025 and February 2026 for c.710MW(5) (c.1.8GWh) of physical assets and tolling contracts, for total commitments of c.£500 million. Operations are expected to commence from the end of 2027.

Drax is continuing to explore a pipeline of additional opportunities.

Capacity Market agreements

In March 2026, Drax provisionally secured agreements to provide a total of 434MW of capacity (de-rated 399MW) principally from its pumped storage and hydro assets(6). The agreements are for the delivery period October 2029 to September 2030, at a price of £27/kW/year(7), with income of c.£11 million in that period. These are in addition to agreements for existing assets which extend to September 2029.

Taken together with existing agreements for pumped storage, hydro and OCGTs, Drax has c.£650 million of index-linked Capacity Market agreements, providing high-quality earnings which extend visibility of the Group’s contracted earnings to 2043.

Pellet Production

The Group’s Pellet Production business is performing well, with a continued focus on cost reduction in its US operations, supporting UK energy security via biomass generation at Drax Power Station. A strategic review of the Group’s Canadian operations is ongoing.

Against the backdrop of growing demand for energy security Drax continues to see long-term potential for new and existing markets for bioenergy, which can offer an alternative to fossil fuels, including in the production of sustainable aviation fuels and other industrial processes.

Biomass Generation

Drax Power Station, the UK’s largest single source of 24/7 renewable power, is performing well, supporting UK energy security with flexible and reliable renewable power generation and a wide range of system support services. A major planned outage on one unit is scheduled for the summer.

Generation contracted power sales

As at 28 April 2026, Drax had over £1 billion of contracted forward power sales between 2026 and 2028 on its Renewables Obligation (RO) biomass, pumped storage and hydro generation assets, with over £800 million of associated ROCs. RO generation is fully hedged for 2026. Since its last update on 26 February 2026, the Group has continued to optimise output as the market has moved, adding 0.2TWh (net) to this position at an average price of £200.9/MWh.

Contracted power sales as at 28 April 2026202620272028Total
Net RO, hydro and gas (TWh)(8)11.12.1(9)0.213.4
Average achieved £ per MWh(10)79.779.470.679.6
Contract for Difference (CfD) (TWh)2.9--2.9

Capital returns

In July 2025, Drax announced a share buyback programme for the purchase of up to £450 million of Drax shares. The programme commenced in October 2025 with a first £75 million tranche, which completed in April 2026. A second £75 million tranche is expected to commence in May 2026.

The total number of voting rights in Drax Group, excluding treasury shares, as at 28 April 2026 was c.336.2 million.

In February 2026, a final dividend of 17.4 pence per share was proposed, subject to approval at the 2026 Annual General Meeting (today, 30 April 2026).

Strategy

Drax is continuing to assess opportunities to invest in energy security, primarily in flexible and renewable energy in the UK, which could support earnings growth.

The Group continues to evaluate opportunities to maximise value from the Drax Power Station site, including the potential for a c.100MW data centre (with an ambition to grow to a >1GW data centre post 2031), as well as other generation sources.

The Group is also assessing options for other renewables projects to complement its portfolio.

Other matters

Drax will report its half year results on Thursday 30 July 2026.

Notes:

  1. Earnings before interest, tax, depreciation, amortisation, excluding the impact of exceptional items and certain remeasurements.
  2. As of 23 April 2026, analyst consensus for 2026 Adj. EBITDA was £665 million, with a range of £643 – £682 million. The details of this consensus are displayed on the Group’s website. Consensus – Drax Global
  3. Measured by output Q1 2025 to Q4 2025. Source: Drax and Elexon
  4. 2025, real-terms.
  5. In October 2025, Drax signed an agreement with Apatura Limited to acquire three BESS projects, which when fully commissioned will provide capacity totalling 260MW. All transactions have now completed and are expected to begin entering service from late 2027 onwards.
    In February 2026, Drax signed tolling agreements with Fidra and Zenobē for 450MW (1.3GWh) of BESS. Under the agreements Fidra and Zenobē will retain responsibility for construction, maintenance and availability of the asset during the contract period. In return Drax will pay a fixed annual tolling fee from the commercial operation date, in return for full operational control and dispatch rights, and retaining all revenues (excluding Capacity Market and certain other ancillary revenues). The assets are expected to enter service from 2028.
  6. Cruachan Pumped Storage (units 1 and 2), the Lanark and Galloway hydro schemes (Bonnington, Carsfad, Drumjohn, Earlstoun, Kendoon, Stonebyres, Tongland) and three small legacy gas turbines at Drax Power Station.
  7. Capacity Market T-4 2029/30 auction real clearing price, with clearing price indexed to UK CPI prior to Delivery Year.
  8. Includes 0.1TWh of structured power sales in 2026 (forward gas sales as a proxy for forward power), transacted for the purpose of accessing additional liquidity for forward sales from RO units and highly correlated to forward power prices.
  9. Contracted power sales to March 2027 for biomass units operating under the RO, after which the units will operate under a CfD mechanism.
  10. Presented net of cost of closing out gas positions at maturity and replacing with forward power sales.

Enquiries:

Drax Investor Relations:
Mark Strafford
[email protected]
+44 (0) 7730 763 949

Chris Simpson
[email protected]
+44 (0) 7923 257 815

Media:

Drax External Communications:
Chris Mostyn
[email protected]
+44 (0) 7743 963 483

Andy Low
[email protected]
+44 (0) 7841 068 415

Website: www.Drax.com

Forward Looking Statements

This announcement may contain certain statements, expectations, statistics, projections, and other information that are, or may be, forward looking. The accuracy and completeness of all such statements, including, without limitation, statements regarding the future financial position, strategy, projected costs, plans, beliefs, and objectives for the management of future operations of Drax Group plc (“Drax”) and its subsidiaries (the “Group”), are not warranted or guaranteed. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Although Drax believes that the statements, expectations, statistics and projections and other information reflected in such statements are reasonable, they reflect Drax’s current view and no assurance can be given that they will prove to be correct. Such events and statements involve risks and uncertainties. Actual results and outcomes may differ materially from those expressed or implied by those forward-looking statements. There are a number of factors, many of which are beyond the control of the Group, which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These include, but are not limited to, factors such as: future revenues being lower than expected; increasing competitive pressures in the industry; uncertainty as to future investment and support achieved in enabling the realisation of strategic aims and objectives; and/or general economic conditions or conditions affecting the relevant industry, both domestically and internationally, being less favourable than expected, including the impact of prevailing economic and political uncertainty, the impact of conflict including those in the Middle East and Ukraine, the impact of cyber-attacks on IT and systems infrastructure (whether operated directly by Drax or through third parties), the impact of strikes, the impact of adverse weather conditions or events such as wildfires, changes to the regulatory and compliance environment within which the Group operates. Drax do not intend to publicly update or revise these projections or other forward-looking statements to reflect events or circumstances after the date hereof, and we do not assume any responsibility for doing so.

END

Trading Update – Strong performance and options to invest

11 December 2025

Financial News

RNS Number: 0978L
Drax Group plc
(“Drax” or the “Group”; Symbol:DRX)

Highlights

  • Strong performance – FlexGen(1), Pellet Production and Biomass Generation
  • Full year 2025 expectations for Adj. EBITDA(2) around the top end of consensus estimates(3)

Adj. EBITDA and free cash flow targets from existing business

  • Continuing to target post 2027 Adj. EBITDA of £600-700 million pa(4)
  • Targeting £3 billion of free cash flow(5) from the existing business (2025 to 2031), supporting:
    • >£1 billion returns to shareholders
    • Up to c.£2 billion for options to invest in growth

Options to invest in growth – energy security, data centres and flexible, renewable energy

  • FlexGen – flexible, renewable energy, including GW scale pipeline of BESS(6) opportunities
  • Drax Power Station site – development of options to utilise 4GW of capacity and grid access
    • Planning application in development for potential option for c.100MW data centre
    • Ambition to grow to >1GW data centre post 2031
    • Potential to further develop system support capabilities and FlexGen

Drax Group CEO, Will Gardiner said:

“It is vital that the UK maintains its energy security and delivers affordable routes to decarbonisation into the 2030s and beyond. Drax stands ready to invest in and grow our portfolio to deliver the renewable and flexible power the country needs while also supporting economic growth in the communities where we operate.

“By 2050, demand for power is expected to double, while secure gas generation reduces and intermittent renewable generation increases, meaning more dispatchable and reliable generation will be required to help keep the lights on when the wind isn’t blowing and the sun isn’t shining.

“Aligned to the UK’s future energy needs and underpinned by a strong balance sheet, good cash generation, and a disciplined approach to capital allocation, we are working to maximise the value of our existing portfolio, while driving growth over the short, medium and long term.

“Our year to date operational and financial performance has been strong, and we are focused on delivering c.£3 billion of free cash flow between 2025 and 2031, which can support investment in energy security, data centres and flexible, renewable energy underpinning long-term value creation and returns to shareholders.”

Full year expectations

Reflecting a strong performance across the Group in the second half of 2025, Drax now expects 2025 full year Adj. EBITDA to be around the top end of consensus estimates(3). Full year expectations remain subject to continued good operational performance.

Generation contracted power sales

As at 9 December 2025, Drax had c.£2.3 billion of contracted forward power sales between 2025 and Q1 2027 on its Renewables Obligation (RO) biomass, pumped storage and hydro generation assets. RO generation is fully hedged for 2025 and 2026, with over £1 billion of associated ROCs.

Contracted power sales as at 9 December 2025202520262027Total
Net RO, hydro and gas (TWh)(7)10.710.92.223.7
Average achieved £ per MWh(8)117.176.779.495.1
Contract for Difference (CfD) (TWh)4.81.8-6.5

Capital returns

In October 2025, the Group completed a £300 million share buyback programme which had commenced in August 2024. The Group subsequently began a £450 million share buyback programme (first announced in July 2025), with an initial £75 million tranche. In aggregate, during 2025, up to 9 December 2025, the share buyback programmes have purchased c.33 million shares for c.£216 million. The total number of voting rights in Drax Group, excluding treasury shares, as at 9 December 2025 was c.341 million. In October 2025 an interim dividend of 11.6 pence per share was paid, totalling c.£40 million.

Outlook

Adj. EBITDA and free cash flow targets from existing business

The Group is continuing to target post 2027 Adj. EBITDA of £600-700 million pa before development expenditure. Delivery of this target is underpinned by disciplined cost management and an operating model adapted to reflect the structure of the recently signed low-carbon, dispatchable CfD agreement with the Low Carbon Contracts Company (a UK Government body) for Drax Power Station, combined with a high-performance culture.

Reflecting growing UK power demand, combined with an increased system reliance on intermittent and inflexible generation, Drax expects to grow its FlexGen business to comprise a greater proportion of total Adj. EBITDA over time.

Open Cycle Gas Turbines (OCGTs) will be a key component of the FlexGen portfolio. The flexibility of these grid balancing assets can enable the increased use of intermittent renewables across the UK system, supporting energy security and a reduction in net carbon emissions. Reflecting these factors, Drax now expects to retain these assets as a part of its FlexGen portfolio.

Taking strong cash flows from the current business (2025-2026) together with targeted Adj. EBITDA (2027-2031), plus working capital, less maintenance capex, interest and tax, Drax is targeting free cash flow of c.£3 billion (2025-2031)(5).

The Group’s capital allocation policy remains unchanged. Drax expects to initially allocate >£1 billion of free cash flow to shareholder returns (2025-2031). This is inclusive of the ongoing £450 million three-year share buyback programme and the continuation of its long-standing policy to pay a sustainable and growing dividend, through which the dividend per share has grown on average by 11% pa since 2017.

Drax expects to allocate up to c.£2 billion to incremental investment, primarily in the flexible and renewable energy the UK needs, as well as opportunities to maximise value from the Drax Power Station site.

Returns to shareholders and investment for growth follow a capital ranking process which aims to maximise risk adjusted returns to shareholders.

Options to invest in growth – FlexGen – flexible, renewable energy

The UK National Energy System Operator’s Future Energy Scenarios indicate a doubling of power demand by 2050, via electrification and new sources of demand, including data centres. At the same time, the continued decarbonisation of the system is leading to a greater reliance on intermittent renewables. The system is becoming cleaner but more volatile, driving a growing need for dispatchable power and system support services, creating long-term earnings opportunities for, and value from, the Group’s FlexGen assets. While the trend is clear, it is hard to forecast from year to year, being dependent on weather and associated renewable activity as much as underlying commodity prices.

This position informs the Group’s view on the value of its FlexGen portfolio and opportunities for growth which can support energy security and the continued deployment of renewables. Since acquisition of the pumped storage and hydro assets in 2018, utilisation of these assets has increased significantly, delivering a five-year payback.

Pumped Storage and Hydro

An £80 million investment to refurbish and upgrade two units at Cruachan Power Station is progressing, with an initial planned outage programme through 2025. The project, which is underpinned by 15-year Capacity Market agreements worth over £220 million (c.£15 million Adj. EBITDA pa), will add 40MW of additional capacity by 2027 and improve unit operations. An additional planned outage programme associated with a transformer upgrade is expected to complete shortly.

OCGTs

Drax expects to take commercial control of the first of the three OCGTs (Hirwaun Power) in Q1 2026. The unit is now commissioning and receiving capacity market payments. The second and third sites are expected to commence commissioning in 2026.This is later than originally planned, primarily due to delays in grid connection by the relevant authorities.

Inclusive of the OCGTs Drax remains committed to its validated SBTi(9) targets and continues to assess options to realise this commitment.

BESS

The Group sees BESS as an important new technology for its FlexGen portfolio, adding fast response capabilities to long duration pumped storage and OCGT assets, which could allow the portfolio to provide a wider range of system support services to the grid.

Drax is developing a GW scale pipeline of BESS opportunities comprised of (1) physical assets and (2) the capabilities to optimise third-party assets with the provision of route to market, floor and tolling structures. In this regard, Drax already provides a route to market for c.2,000 embedded third-party renewable assets with capacity of c.800MW via its Energy Solutions business.

In October 2025, Drax signed an agreement with Apatura Limited (“Apatura”) to acquire three BESS projects, which when fully commissioned will provide capacity totalling 260MW. Drax will pay a fixed amount of £157.2 million in staged payments between 2025 and 2028, reflecting construction milestones and including payments to Apatura linked to their delivery of the projects. The acquisition of the Marfleet (England) and Neilston (Scotland) projects is now complete, with the acquisition of the East Kilbride (Scotland) project expected to be finalised in 2026.

The Group is also assessing options for other renewables, which can complement its FlexGen model.

Options to invest in growth – Drax Power Station Site

The Drax Power Station site comprises over 1,000 acres and 4GW of capacity and grid access, with 2.6GW of active dispatchable generation, cooling systems, and proximity to the UK fibre network.

The Group is focused on options to maximise value from the site, which could utilise multiple generation technologies including its existing biomass generation as well as flexible, renewable energy, to continue to support energy security, while potentially meeting the power demands of a large-scale data centre and in the long-term the potential for carbon removals from BECCS(10).

Data centre

Drax is considering a range of options for the site which could utilise its existing land, grid access, active generation, cooling solutions, site security, location and skilled workforce to meet the needs of data centre developers.

Drax is preparing a planning application to support the potential option for a first phase data centre of c.100MW on land identified at Drax Power Station, using existing infrastructure and transformers previously used to support coal generation to import power directly from the grid (front-of-the-meter). This could support the operation of a data centre at Drax Power Station as soon as 2027.

In November 2025, Drax signed a CfD agreement with the UK Government to provide c.6TWh of biomass generation pa between April 2027 and March 2031 – equivalent to c.30% of baseload output – with a strike price of £109.90/MWh (2012 real). In addition to the option to produce additional merchant generation above the cap and for system support and ancillary services, the agreement includes a mechanism for Drax to request up to 500MW to power a data centre during this period. This is subject to agreement with the UK Government, taking into account a number of factors, including value for money for consumers, energy security, and sustainability.

In the long term Drax is assessing options for over 1GW of data centre capacity, which is expected to utilise existing generation capabilities at Drax Power Station to provide a distributed (behind-the-meter) energy solution with around-the-clock renewable power directly to a data centre under a long-term Power Purchase Agreement, subject to necessary consents.

Any decision to develop data centres at Drax Power Station will require a full assessment of the capital cost and investment case as well as establishment of the commercial and development structures, including joint ventures.

Pellet Production

In the medium term, the Group’s US business is well underpinned by sales into the UK. The Group’s Canadian business, which primarily sells pellets into Asia, is expected to be more challenged, which has contributed to the decision to close Drax’s pellet plant in Williams Lake. Against this backdrop the Group does not currently expect to invest in additional capacity in the short to medium term, including the paused Longview project.

In the long term, Drax remains positive on biomass’ role in industrial decarbonisation and carbon removals via its Elimini business. Drax is continuing to assess options for own-use and third-party sales, from existing and new markets, including Sustainable Aviation Fuel, which could represent a major market opportunity from 2030 onwards.

Other matters

Drax will report its full year results on Thursday 26 February 2026.

Notes:

  1. Flexible Generation (FlexGen) is currently comprised of the Group’s pumped storage and hydro assets, three OCGT plants which are expected to enter commercial service in 2026 and an Energy Solutions business which provides renewable energy and services to I&C customers as well as a route to market for small renewable assets.
  2. Earnings before interest, tax, depreciation, amortisation, excluding the impact of exceptional items and certain remeasurements. Adj. EBITDA includes the Electricity Generator Levy (EGL).
  3. As of 4 December 2025, analyst consensus for 2025 Adj. EBITDA was £902 million, with a range of £892 – £909 million. The details of this consensus are displayed on the Group’s website.
    Consensus – Drax Global
  4. Excludes investment opportunities including development expenditure in Elimini, Innovation, Capital Projects and Other.
  5. Free cash flow pre-dividend, including targets for post 2027 Adj. EBITDA, c.£0.5 billion working capital inflow from end of RO scheme, maintenance capex, interest, taxes and EGL.
  6. Battery Energy Storage System.
  7. Includes <0.1TWh of structured power sales in 2026 and 2027 (forward gas sales as a proxy for forward power), transacted for the purpose of accessing additional liquidity for forward sales from RO units and highly correlated to forward power prices.
  8. Presented net of cost of closing out gas positions at maturity and replacing with forward power sales.
  9. Science Based Targets Initiative.
  10. Bioenergy with Carbon Capture and Storage.

Enquiries:

Drax Investor Relations:
Mark Strafford
[email protected]
+44 (0) 7730 763 949

Chris Simpson
[email protected]
+44 (0) 7923 257 815

 

Media:

Drax External Communications:
Chris Mostyn
[email protected]
+44 (0) 7743 963 483

Andy Low
[email protected]
+44 (0) 7841 068 415

Website: www.Drax.com

Forward Looking Statements

This announcement may contain certain statements, expectations, statistics, projections, and other information that are, or may be, forward looking. The accuracy and completeness of all such statements, including, without limitation, statements regarding the future financial position, strategy, projected costs, plans, beliefs, and objectives for the management of future operations of Drax Group plc (“Drax”) and its subsidiaries (the “Group”), are not warranted or guaranteed. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Although Drax believes that the statements, expectations, statistics and projections and other information reflected in such statements are reasonable, they reflect Drax’s current view and no assurance can be given that they will prove to be correct. Such events and statements involve risks and uncertainties. Actual results and outcomes may differ materially from those expressed or implied by those forward-looking statements. There are a number of factors, many of which are beyond the control of the Group, which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These include, but are not limited to, factors such as: future revenues being lower than expected; increasing competitive pressures in the industry; uncertainty as to future investment and support achieved in enabling the realisation of strategic aims and objectives; and/or general economic conditions or conditions affecting the relevant industry, both domestically and internationally, being less favourable than expected, including the impact of prevailing economic and political uncertainty, the impact of conflict including those in the Middle East and Ukraine, the impact of cyber-attacks on IT and systems infrastructure (whether operated directly by Drax or through third parties), the impact of strikes, the impact of adverse weather conditions or events such as wildfires, changes to the regulatory and compliance environment within which the Group operates. Drax do not intend to publicly update or revise these projections or other forward-looking statements to reflect events or circumstances after the date hereof, and we do not assume any responsibility for doing so.

END

 

How Wood Pellets Support Clean Energy Goals, Forests, and Communities

1 October 2025

Opinion

By Kyla Cheynet, Director of Sustainability, Drax

When we think of clean energy, solar panels and wind turbines often dominate the conversation, but as we work to enable a zero carbon, lower cost energy future, it’s going to take all clean energy industries working together. Biomass, in the form of wood pellets, has been quietly making a big impact by helping countries reduce carbon emissions, support sustainable forestry, and transition away from fossil fuels. 

What Are Wood Pellets? 

At Drax, we operate within the larger forest industry, making our wood pellets from sawmill residues and low-grade wood from the forest. Mill residuals come in the form of shavings, sawdust and chips, while material sourced from sustainable harvests comes from tree trunks, tops, and limbs which are too small or malformed to make sawtimber.  Wood that arrives in roundwood form is debarked and chipped on-site, with bark being used as fuel to dry the high-moisture chips and sawdust.  Once the fiber is dried it, is resized by “hammermills” into a very small particles which are then compressed under high pressure by “pellet mills” which cause the natural resins in the wood to bind together forming small wood pellets that look just like those used for pellet burning grills or home heating.  The wood pellets we produce are: 

  • Renewable: Sourced from sustainably managed forests and manufacturing residuals. 
  • Efficient: Low moisture content means high energy output. 
  • Easily transported: Pellets can be loaded on trucks, railcars, and ships with ease.  

Supporting Sustainable Forestry 

The forests that we source our biomass from are managed in accordance with best practices designed to support the health and growth of these forests over the long term.   We have strict criteria in place to ensure our fiber sourcing helps maintain or improve forest health, landscape-level carbon stocks, biodiversity, and forest-related values communities depend on.  

In the U.S. South, forest inventory has expanded rapidly in recent decades, largely due to improved forest management on private lands These vigorously growing forests are considered a wood basket to the world.  Active forest management is essential to maintaining the productivity and ecological value of these forests.  Thinning, an intermediate harvest aimed at reducing tree density, is essential to maintaining forest health. Thinning not only increases future sawtimber yields by allocating greater resources to “crop trees”, but also improves the forest’s resilience to pests, disease, and wildfire, all while enhancing understory plant diversity and wildlife habitat. 

Most trees removed during thinning operations are generally undersized or unsuitable for lumber, but they are ideal for producing wood pellets! In this way, the biomass market creates an incentive for managers to engage in practices that increase the health and vigor of forests on their land. 

Why Is This Important? 

At Drax, our mission is to help meet the world’s increasing demand for secure energy, sustainably. Sustainably sourced biomass plays an important role in supporting energy security as the world decarbonizes, displacing fossil fuels with renewable, dispatchable power that supports intermittent renewables like wind and solar.  

Biomass markets also bring business to rural communities. In addition to direct employment opportunities in manufacturing Drax’s operations supports hundreds of jobs throughout the larger forest industry in Mississippi. Drax pellet plants also create market opportunities for landowners hoping to generate a return on their forest investment.  Markets for low-grade biomass incentivize landowners to continue managing forests rather than converting or selling them off to other uses.  And we all benefit when forests remain forests!

To learn more about Drax’s impact in Gloster, Mississippi, visit www.drax.com/gloster  

Leading the way with transparency and action

11 March 2025

Opinion
Two Drax workers in forest

  • Voluntary reporting for Drax’s EU Taxonomy alignment shows why we must keep leading on sustainable finance
  • Our upgraded CDP scores further underline our credentials for best practice in both strategy and action

Sustainability shapes how we operate at Drax. It provides our stakeholders with the trust they need as we demonstrate how we strive to provide secure, renewable energy to millions of homes and businesses, in a responsible way.

That is why we are pleased to hit another significant milestone in our ongoing sustainability journey, with the release of our first ever EU Taxonomy Report.

The report reflects our deep commitment to sustainability and highlights our continued work towards aligning ourselves with the European Union’s sustainability goals. In terms of results, the report shows that 71% of Drax’s revenue qualifies as eligible and aligned with the Taxonomy, with 99% of that aligned revenue meeting sustainability principles.

But what is it? EU Taxonomy is a classification system that was created by the European Commission, to define which economic activities contribute to environmental sustainability. It serves as a core part of the EU’s sustainable finance framework, guiding investment flows towards activities that align with the EU’s Green Deal and its broader climate goals.

It’s essentially a roadmap for companies and investors to understand what qualifies as environmentally sustainable. For businesses like Drax, aligning with the EU Taxonomy is essential, as it reinforces our ambition to help tackle climate change while maintaining strong financial performance.

So, why is the EU Taxonomy so important in the context of Drax’s sustainability journey? It’s because the system establishes clear guidelines and benchmarks aimed at ensuring that investment is directed towards activities that contribute meaningfully to environmental sustainability.

It plays a crucial role in accelerating the transition to a green economy and helps companies like Drax with their ambitions to meet their global sustainability targets. By aiming to align what we do with the EU Taxonomy, we aim to ensure that our operations, revenue generation, and financial models support these crucial climate objectives.

The results of our first EU Taxonomy Report demonstrate how far we’ve come in our sustainability efforts. The headline figure that 99% of our eligible revenue meets the sustainability criteria is a source of pride. This is a strong affirmation of our long-term dedication to environmental stewardship and is a significant achievement.

Compared to the broader business landscape, our results are an extraordinary achievement. A 2024 report from EY, that used a sample of 307 European companies non-financial disclosures, showed that the average EU Taxonomy alignment for turnover was 10% across all sectors, with the energy and power sector rising to 37%. For Drax, this rises even further to 71%, positioning us as a leader in taxonomy-aligned sustainability principles.

The reason for this alignment is simple: Drax has made intentional and strategic decisions over the years to transition our business towards renewable energy, with the most notable being the transition from coal to biomass at Drax Power Station.

However, achieving alignment with the EU Taxonomy goes beyond just ticking the necessary boxes. We’re focused on aiming to exceed the minimum standards set out by the taxonomy. The fact that 71% of our revenue is fully aligned with the EU Taxonomy speaks to the forward-thinking strategies that we have put in place.

One of the key pillars of sustainability at Drax is our focus on forestry, specifically how we manage and source biomass. Forests are a crucial component of the global carbon cycle. As part of our commitment to achieve net zero by the end of 2040 across our value chain, we endeavour to source our biomass from sustainably managed forests and must be mindful of the impact our activities have on biodiversity, carbon sequestration, communities, and forest health.

This is where the importance of our CDP (Carbon Disclosure Project) scores come in and these act like a snapshot of a company’s performance on environmental action. Their annual reports provide valuable insights into a company’s efforts to reduce emissions and manage natural resources responsibly, using voluntarily disclosed data to provide a score based upon three main critical areas: greenhouse gas emissions, water management, and deforestation.

We have worked hard on these areas, to demonstrate our dedication and progress towards climate action to our investors and other stakeholders. We have maintained our A- CDP climate score and alongside this our CDP Forests score was upgraded to A-. For the first time this positions Drax in the highest ‘leadership’ banding of CDP scores, recognising best practice for both strategy and action, and ranking Drax in the leading group of FTSE businesses.

The upgraded CDP score for forestry reflects our ongoing efforts to aim to ensure that our biomass sourcing practices do not contribute to deforestation or degradation of ecosystems. By sourcing from responsibly managed forests, we aim to ensure that our biomass is part of a sustainable, circular process where forest health is maintained and enhanced.

We recognise that both environmental sustainability as measured by the EU Taxonomy and our evolving CDP scores will require consistent work to maintain and improve. Alongside this we have developed a new sustainability framework, in consultation with a variety of different groups including representatives from the scientific community, academics, employees, investors and environmental NGOs.

But this holistic approach must be seen as the starting point of a journey. With the climate crisis becoming an even bigger threat to our planet, we must redouble our efforts. That means open and frank conversations with internal and external stakeholders where possible and concerted efforts to decarbonise our supply chain. It also means continuing to prioritise the rigorous standards of best practice measured by mechanisms such as EU taxonomy and CDP ratings. These pillars will be the key to proving that Drax can keep the lights on for millions of people using sustainable biomass generation, responsibly.