Drax Group (LON:DRX) reported first-half adjusted EBITDA of £279 million for 2026, reflecting lower achieved forward power prices compared with the prior year, while outlining plans to expand its flexible generation, battery storage, solar and wind operations.
Chief Executive Officer Will Gardiner said the company provided about 6% of U.K. power and 10% of U.K. renewable electricity during the first half. He said the performance was supported by safe and efficient operations, as Drax continues to reposition from a largely single-site biomass generator into a broader portfolio of generation, storage, trading and route-to-market businesses.
Financial results and shareholder returns
Chief Financial Officer Frank Lemmink said first-half adjusted EBITDA of £279 million was lower than the first half of 2025, as anticipated, due to lower forward power prices. Adjusted earnings per share were £0.298, down year over year, reflecting the EBITDA decline and non-cash foreign-exchange movements, partly offset by lower depreciation and amortization.
Net debt stood at £1.025 billion, or 1.3 times EBITDA over the previous 12 months, below Drax’s long-term target of around two times EBITDA. The company reported approximately £630 million of total cash and committed facilities, excluding the impact of the BSIF transaction.
Drax expects to pay a full-year dividend of £0.322 per share, an 11% increase from 2025. The proposed interim dividend is £0.129 per share, representing 40% of the expected annual distribution. The company also returned £47 million to shareholders through share buybacks year to date, although Lemmink said the buyback program is currently paused while Drax evaluates growth opportunities.
The company maintained its expected 2026 capital expenditure range of £210 million to £250 million, excluding acquisitions. Lemmink said Drax is pursuing structural annual cost savings of more than £150 million by 2027 compared with its 2024 cost base, including reductions in staff and third-party costs.
Portfolio expansion and BSIF acquisition
Gardiner said Drax’s portfolio is expected to reach 6.1 gigawatts of capacity under management during 2026, from 4 gigawatts at the end of 2025. The expansion includes the Hirwaun open-cycle gas turbine, additional route-to-market capacity through Flexitricity and the proposed BSIF acquisition.
BSIF shareholders voted 99% in favor of the acquisition on July 24. A court hearing to approve the scheme was scheduled for July 31, with completion expected later that day. BSIF operates a U.K. portfolio of roughly 900 megawatts of solar and wind assets and has a 2.9-gigawatt development pipeline.
Gardiner said BSIF generated approximately £130 million of EBITDA in the financial year ended June 30, 2025, supported by contracted cash flows. He said the acquisition would give Drax three substantial generation businesses: biomass, flexible generation, and solar and wind. The company expects to provide additional details on BSIF in September.
Drax said its existing route-to-market business manages more than 2,000 small-scale solar and wind sites totaling about 800 megawatts and generates roughly £10 million of annual earnings. Gardiner said the BSIF portfolio is a similar size and would be managed through comparable services.
Flexible generation and battery investments
Hirwaun Power Station, a 300-megawatt open-cycle gas turbine facility in South Wales, began operations at the end of May. Gardiner said the project represented an investment of more than £100 million. In its first month, the station provided power generation, balancing-market services and grid-stabilization support.
Lemmink said Hirwaun operated in a non-generation synchronization mode for about 440 hours in June, or around 60% of the month. The capability allows the turbine to support grid stability without generating electricity.
Hirwaun’s sister sites, Millbrook and Progress, are now expected to commission from late 2026 through 2027, later than previously expected because of connection delays involving relevant authorities. Once operating, the three facilities are expected to provide approximately 900 megawatts of capacity and hold 15-year Capacity Market agreements worth around £260 million, in addition to potential peak-power and system-support revenues.
Drax has committed about £500 million to more than 700 megawatts of BESS capacity. The company has acquired three 260-megawatt development projects under a fixed-price agreement, with options over another 289 megawatts. It has also entered tolling arrangements covering 450 megawatts with Fidra and Zenobe. Under those arrangements, developers will build and maintain the assets while Drax will optimize operations and retain operating revenues other than capacity payments and certain ancillary revenues.
Lemmink said the £50 million to £100 million increase in Drax’s 2029 EBITDA target represents the expected contribution from BESS. Gardiner said the lower end of the range reflects a downside year, while the upper end depends on more favorable market volatility.
Drax Power Station and longer-term opportunities
At Cruachan, an unplanned outage on units three and four reduced Flexible Generation earnings after a grid-connection failure involving assets owned by ScottishPower Energy Networks, Lemmink said. Planned turbine upgrade work remains under way and is expected to add 40 megawatts of capacity. Units one and two maintained high utilization, he added.
Drax is also evaluating uses for its Drax Power Station site, which has more than 1,000 acres and 4 gigawatts of grid access. The company plans to submit a planning application in the second half for an initial 100-megawatt data center using existing infrastructure to import power from the grid.
Gardiner said a potential second phase could use about 500 megawatts of behind-the-meter capacity before 2031, subject to agreement with the U.K. government, while a third phase could add capacity of up to 1 gigawatt and beyond after 2031. He said the broader project could represent a multibillion-dollar U.K. investment and create thousands of jobs.
Looking ahead, Gardiner said Drax has plans and committed capital to grow to 7.4 gigawatts under management by 2029, with longer-term potential for around 12 gigawatts of operational assets across generation, storage and renewable services.
About Drax Group (LON:DRX)
Drax Group plc, together with its subsidiaries, engages in renewable power generation in the United Kingdom. It operates through three segments: Pellet Production, Generation, and Customers. The Pellet Production segment produces and sells biomass pellets. The Generation segment provides renewable, dispatchable power, and system support services to the electricity grid. The Customers segment supplies electricity and gas to non-domestic customers. The company owns and operates Drax Power Station located in Selby, North Yorkshire; Cruachan Power Station, a pumped storage hydro station, with an installed capacity of 440 megawatts (MW) located in Argyll and Bute; and Lanark and Galloway hydro-electric power stations with an installed capacity of 126 MW located in southwest Scotland.
