Drax Group has reported good operational performance across its portfolio in the first part of 2026, with full year adjusted EBITDA expected to be in line with consensus estimates.
The biomass generator, which produces over 5% of the UK's electricity and around 10% of its renewable power, said its assets had played a key role in supporting energy security during a period of geopolitical uncertainty.
Chief executive Will Gardiner said the company was at a 'key moment of transition', with its first battery storage projects underway and the commissioning of its first open cycle gas turbine (OCGT) unit progressing.
'We are excited about the potential opportunities to invest further to help the country meet its growing energy needs,' he said.
Drax completed its acquisition of flexible energy asset optimiser Flexitricity in March, adding a scalable platform intended to support a gigawatt-scale pipeline of battery energy storage system (BESS) opportunities. The acquisition sits alongside c.710MW of physical assets and tolling contracts secured between October 2025 and February 2026, representing total commitments of around £500 million. Operations are expected to begin from end of 2027.
The company also expects to assume control of Hirwaun Power Station in South Wales shortly, the first of three 299MW OCGT plants it is developing in England and Wales.
At Cruachan pumped storage station, units 1 and 2 continue to perform well, though units 3 and 4 remain on forced outage following a grid connection failure caused by Scottish Power Energy Networks assets in late December. A refurbishment programme for all four units is progressing, underpinned by a 15-year Capacity Market agreement worth over £220 million.
In March, Drax provisionally secured Capacity Market agreements totalling 434MW for the October 2029 to September 2030 delivery period, at £27/kW/year. Combined with existing agreements, the group now holds around £650 million of index-linked Capacity Market contracts extending earnings visibility to 2043.
Drax said it does not expect to pay any Electricity Generator Levy in 2026, following the government's April announcement extending the scheme beyond March 2028 and increasing the levy rate. From April 2027, Drax Power Station will operate under a Contract for Difference arrangement not subject to the EGL.
The group also said the government's decision to remove the Carbon Price Support mechanism from April 2028 does not change its expectations.
On capital returns, the first £75 million tranche of Drax's £450 million share buyback programme completed in April, with a second £75 million tranche due to commence in May. A final dividend of 17.4 pence per share is subject to shareholder approval at today's AGM.
Drax will report half year results on 30 July 2026.
Drax reports strong start to 2026 as FlexGen expansion accelerates
