Drax estimates £60m hit from COVID-19

Drax has estimated a £60 million (€68.6 million) hit as a result of the COVID-19 pandemic. Despite the potential financial impact, the company said it remains in a 'strong position'.

In a statement, the company said full-year expectations for the group remain 'underpinned by good operational availability' for the rest of 2020. The firm said in its Customers business, the consequences of the pandemic are only now starting to become clear. It is expected that the outbreak will result in reduced demand and a potential increase in bad debt. The company said it has increased its expectation of potential customer business failures and higher bad debt.

"With our strong balance sheet, robust trading and operational performance, and resilient sustainable biomass supply chain, Drax is in a strong position to support its employees, business customers and communities, during the COVID-19 crisis, while continuing to generate returns for shareholders," said Drax CEO Will Gardiner.

"As an important part of the UK's critical national infrastructure, we recognise our responsibility to support the country's response to COVID-19. We have strong business continuity plans in place and are in close contact with the UK Government.

"Our dedicated teams across England, Scotland and Wales, supported by our US biomass colleagues and business partners, are working around the clock to generate and supply the flexible, low-carbon and renewable electricity the UK needs, not least to the 250,000 businesses, including care homes, hospitals and schools we supply."

According to Gardiner, Drax is also providing support to communities and others affected by the virus. The company is delivering hundreds of laptops with internet access to school and colleges local to its operations across the UK, to ensure students can continue with their studies during the crisis.

In terms of biomass generation, Drax said it has 'performed well' in the first quarter of 2020, stating that while the virus has not had any 'measurable impact' on biomass generation, a sustained reduction in electricity demand could result in a reduction in renewables obligation certificate (ROC) recycle prices in the current compliance period.