REG - Drax Group Plc - Low-carbon dispatchable CfD contract agreement

DraxAnnouncement

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RNS Number : 1955G  Drax Group PLC  05 November 2025

5 November 2025

This announcement contains inside information

Drax Group plc

("Drax"; Symbol: DRX)

 

Low-carbon dispatchable CfD contract agreement

Highlights

·    Contract signed with UK Government (Low Carbon Contracts Company -
LCCC) for operation of Drax Power Station (DPS) post March 2027 subject to
usual CfD conditions precedent

·    No significant changes from Heads of Terms agreed in February 2025

- Contract period April 2027 to March 2031

- CfD scheme with a strike price of £109.90/MWh (2012, real) applied to all
four biomass units

- c.6TWh pa generation collar with flexible operation to support high and low
demand periods

- Opportunity for unrestricted merchant generation above collar

 

Drax confirms that it has signed an agreement with the LCCC for a low-carbon
dispatchable CfD to cover all four biomass units at DPS over the period April
2027 to March 2031, with a strike price of £109.90/MWh (2012, real). The
terms are substantively as announced in the Heads of Terms (February 2025).

 

The strike price has reduced from the price referenced in the Heads of Terms,
to reflect favourable movements in exchange rates which are expected to reduce
the overall cost of biomass, resulting in no material impact on expectations
for Adj. EBITDA, which remain unchanged.

 

Drax Group CEO, Will Gardiner, said: "We are pleased to have agreed this new
contract with the UK Government, which will support UK energy security into
the 2030s and deliver a net saving for consumers compared to alternative
sources of dispatchable generation.

 

"The agreement will support the rollout of intermittent renewable generation
across the UK and provides options to ensure Drax Power Station continues to
play a long-term role in the regional economy and UK energy system.

 

"Independent analysis by Baringa estimates savings of up to £3.1 billion over
the four-year term, all while ensuring Drax Power Station keeps the lights on
for millions of homes and businesses, no matter the weather."

 

Details of the low-carbon dispatchable CfD

Under the agreement DPS will sell c.6TWh of power annually against a season
ahead reference price (as per the current CfD scheme) and then seek to
maximise generation from its four units at times of high demand and reduce
generation at times of low demand, using the station's flexibility to support
UK energy security and capture higher prices (similar to their operation under
the Renewable Obligation Certificate scheme). The agreement allows for
additional merchant generation above 6TWh, system support and ancillary
services, where Drax continues to play an active role.

 

The agreement includes enhanced biomass sustainability requirements, including
that all biomass used at Drax Power Station is sustainably sourced and
verified through monitoring, reporting, and verification requirements,
including enhanced auditing of the biomass supply chain. Drax welcomes these
enhancements to its existing procedures, which demonstrate the Group's
commitment to delivering climate, nature and people positive outcomes.

 

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

andy.low@drax.com

+44 (0) 7841 068 415

 

Website: www.drax.com (http://www.drax.com/)

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). The
person responsible for the release of this information was Hillary Berger
(Group General Counsel).

 

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: 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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