REG - Drax Group Plc - Acquisition of 260MW 2-hour BESS portfolio

DraxAnnouncement

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RNS Number : 4098F  Drax Group PLC  30 October 2025

30 October 2025

Drax Group plc

("Drax"; "The Group"; Symbol: DRX)

 

Acquisition of 260MW 2-hour BESS portfolio

 

Drax is pleased to announce that it has signed an agreement with Apatura
Limited ("Apatura")((1)) to acquire three battery energy storage system
("BESS") projects, which when fully commissioned will provide capacity
totalling 260MW((2)). 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.
Completion of the acquisition of the first two projects is expected to occur
in 2025 with completion of the third project expected in Q1 2026.

 

Highlights

·    260MW 2-hour duration development portfolio across three sites in
Scotland and England

·    Construction on all three sites is expected to commence in 2026 with
the first site operational in 2027

·    Agreement with Apatura provides contractual protections for cost
overruns and delay

·    Expected returns significantly ahead of Drax's Weighted Average Cost
of Capital

·    Funded from cash and existing facilities

·    Strong strategic fit

·    Complements Drax FlexGen strategy, adding short duration and fast
response capability

·    Option over a further eight sites (289MW) being developed by Apatura

·    Closely aligned with UK energy objectives of energy security and
decarbonisation

 

Drax Group CEO, Will Gardiner said: "This acquisition is our first investment
in short duration storage as part of our FlexGen portfolio, supporting UK
energy security and a clean power system.

 

"We are looking forward to working with Apatura on the development of battery
storage, which when commissioned will allow us to provide even more secure
power to the country when it is needed. In combination with our long duration
energy storage, flexible generation and renewable generation from biomass, we
will be able to provide 4.4GW of dispatchable generation to meet demand.

 

"As the UK's network increases its reliance on intermittent renewables, more
dispatchable and reliable generation will be required to help keep the lights
on when the wind isn't blowing or the sun isn't shining.

 

"Through the development of our strategy we are working to create value and
growth in the short, medium and long-term, aligned to the UK's energy needs
and underpinned by strong cash generation, a disciplined approach to capital
allocation and attractive returns for shareholders, significantly in excess of
our weighted average cost of capital."

 

260MW 2-hour duration development portfolio across three sites in Scotland and
England

The portfolio consists of three ready-to-build BESS sites, two in Scotland and
one in Northern England((2)).

 

Construction on all three sites is expected to commence in 2026 with the first
site in Scotland due to be operational in 2027, with the second and third
sites expected to commence operations thereafter. Apatura will manage the
development of the projects and bear the majority of the construction risk
(cost and delay), reflected in the fixed cash consideration and contractual
protections.

 

Linked to the transaction, Drax has agreed the option of a right of first
offer over a further eight sites (289MW) being developed by Apatura, creating
optionality for the continued development of the FlexGen portfolio.

 

Strategic fit - aligned with UK energy needs and complementary to Drax FlexGen
business

Drax believes that the retirement of older thermal generation assets and
increased reliance on intermittent renewables, as well as an increase in power
demand, will drive a growing need for dispatchable power and system support
services, creating long-term earnings opportunities for, and value from, the
Group's FlexGen portfolio. This is in line with National Energy System
Operator's (NESO's) Future Energy Scenarios which show a potential doubling of
total demand for electricity in the UK over the coming decades, as well as an
increase in curtailment of wind and reduction in dispatchable thermal
generation.

 

The Group's FlexGen business currently comprises long duration pumped storage,
hydro and Open Cycle Gas Turbines (OCGTs), but not short duration BESS with
fast response capabilities. Drax believes that once commissioned, two-hour
BESS provides as an attractive entry point into the short duration storage
space, and complementary to the Group's FlexGen business, allowing it to
provide a wider range of system support services, as well as increased access
to wholesale and balancing markets.

 

Once the BESS assets are operational, the Group's FlexGen portfolio will
comprise 1.8GW((3)) of long and short duration storage and flexible generation
across nine sites in England, Scotland and Wales, with access to demand side
flexibility through the Group's Industrial & Commercial customer
portfolio. Drax Power Station provides 2.6GW, taking the Group's total to
4.4GW((3)) of dispatchable generation.

 

By operating BESS as part of an integrated portfolio across multiple
technologies and sites, Drax expects to access more opportunities to provide
services and support to the system, widening its earnings opportunities.

 

Notes:

(1)   Apatura are a UK based renewable energy and BESS developer founded in
2014 and are responsible for Scotland's largest energy storage pipeline, with
10GW of renewable energy capacity in development.

Battery Energy Storage Systems - Apatura - Welcome to the Future
(https://apatura.energy/technologies/battery-energy-storage-systems/)

(2)   Sites are located in Marfleet (Hull, England), Neilston (East
Renfrewshire, Scotland) and East Kilbride (Lanarkshire, Scotland). Both
Marfleet and Neilston have all necessary planning permission whilst East
Kilbride has a planning application pending. Drax will not incur any cost for
East Kilbride until the planning application is approved.

(3)   0.6GW pumped storage and hydro, 0.9GW OCGTs at three sites in England
and Wales (under construction with first site currently commissioning), 0.3GW
BESS, totalling 1.8GW, plus 2.6GW biomass generation.

 

 

Enquiries:

Drax Investor Relations:

Mark Strafford

mark.strafford@drax.com

+44 (0) 7730 763 949

 

Chris Simpson

Chris.Simpson@drax.com (mailto:Chris.Simpson@drax.com)

+44 (0) 7923 257 815

 

Media:

Drax External Communications:

Chris Mostyn

Chris.Mostyn@drax.com

+44 (0) 7743 963 483

 

Andy Low

andrew.low@drax.com

+44 (0) 7841 068 415

 

Website: www.drax.com (http://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: projects achieving the
required milestones, including delivery of required equipment, access to the
requisite resources and completion of connections to enable operation within
expected timeframes, 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 conflicts around the world; 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; and changes to the regulatory
and compliance environment within which the Group operates. We 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

 

 

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