Drax trading on track for the year as it awaits Westminster’s carbon capture sign-off
Power firm Drax said today that it’s trading in line with expectations for the year as it gears up for further growth.
In a statement to the London Stock Exchange today, the group, which has its annual general meeting (AGM) today, confirmed it was on track to hit expectations for full-year earnings before interest, tax, deprecation and amortisation (EBITDA).
Analyst consensus for 2024 adjusted EBITDA was £968m as of 22 April with a range of £881m to £1.1bn.
Drax also confirmed that construction of three new open-cycle gas turbines with a combined capacity of 900MW continued, with commissioning expected to take place in September 2024.
Additionally, the group has launched a tender offer process for its €250m (£214m) 2025 bond and also announced the full redemption of its $500m (£400m) 2025 bond, both of which are expected to complete in May 2024.
Drax added that a final dividend of 13.9p per share was subject to shareholder approval at today’s AGM. The total dividend per share for the year was 23.1p, up 2p on last year’s total distribution.
As at 22 April, Drax had over £2.9bn of contracted forward power sales between 2024 and 2026 on its pumped storage and hydro generation assets – 23.3TWh at an average price of £125.4/MWh.
The company primarily uses biomass to generate power from its plants in the North of England and said today that the market for finding pellets is currently “challenging”.
However, Drax has big hopes for its controversial bioenergy with carbon capture and storage (BECCS) project, to be built next to its highly-emitting plant.
The company is awaiting the government’s decision on whether to support a bridging mechanism for the BECCS project.
The group also updated the markets on Ofgem’s investigation into Drax’s annual biomass profiling reporting, adding that the watchdog had not found any non-compliance that would affect Drax’s business but that a full decision is still expected.
Drax Group chief executive, Will Gardiner said: “We continue to deliver a strong system support and generation performance, providing dispatchable, renewable power for millions of homes and businesses.
“We are excited about the opportunity to deliver BECCS at Drax Power Station, the country’s largest source of 24/7 renewable power by output – with a bridging mechanism and the right support from Government, our BECCS plans could help the UK meet its net zero targets and continue to support the country’s long-term energy security, while creating thousands of new jobs across the region.”
The group will report its half-year results on 26 July 2024.