REG - Drax Group Plc - Tolling agreement for 250MW (500MWh) of BESS

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RNS Number : 9970Q  Drax Group PLC  30 January 2026

30 January 2026

Drax Group plc

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

 

Tolling agreement for 250MW (500MWh) of BESS

 

Drax is pleased to announce that it has signed a tolling agreement with West
Burton C Limited, a company owned by Fidra Energy ("Fidra", an independent
Battery Energy Storage Systems "BESS" developer)((1)), for 250MW (500MWh) of
new BESS capacity.

 

Highlights

·    Tolling agreement for 250MW 2-hour duration BESS at West Burton,
England

·    No upfront capital cost - construction, maintenance and availability
risk sits with Fidra

·    10-year tolling agreement with annual payments indexed to UK CPI

·    Contract provides Drax with full operational control and dispatch
rights

·    Protected grid connection, targeting a Commercial Operation Date
(COD) in 2028

·    Expected returns significantly ahead of Drax's Weighted Average Cost
of Capital((2))

·    Strong strategic fit

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

·    Complements Drax investments in physical ownership of BESS and asset
optimisation

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

 

Drax Group Chief Executive Officer, Will Gardiner, said: "Flexible Generation
technologies like battery storage will support a secure, affordable and clean
energy system for British homes and businesses. Our first BESS tolling
agreement is an important step in our ambition for a gigawatt scale pipeline
of battery storage opportunities, alongside our recent acquisitions of
Flexitricity and three battery storage developments.

 

"We are working to create opportunities for growth and value creation in our
FlexGen portfolio that are aligned to the UK's energy needs, and are
underpinned by strong cash generation, disciplined capital allocation and
attractive returns for shareholders."

 

Under the agreement Fidra will retain responsibility for construction,
maintenance and availability of the asset during the contract period. In
return Drax will pay a fixed annual tolling fee over the agreed term of 10
years from the COD, in return for full operational control and dispatch
rights, retaining all revenues (excluding Capacity Market revenues).

 

Drax sees the agreement as a capital light opportunity to provide additional
BESS capacity for the Group's FlexGen portfolio, alongside physical ownership
of BESS assets((3)).

 

The agreement is subject to Fidra taking a final investment decision on the
project by Q3 2026 and commercial operations by H2 2029.

 

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

Drax is developing a GW scale pipeline of BESS opportunities comprised of (1)
physical assets and (2) the capabilities to optimise third-party assets with
the provision of route to market, floor and tolling structures.

 

In October 2025, Drax signed an agreement with Apatura Limited to acquire
three BESS projects, which when fully commissioned will provide capacity
totalling 260MW((3)). In January 2026 Drax announced the acquisition of
Flexitricity, providing an optimisation platform for the development of the
Group's FlexGen business, including BESS((4)).

 

Notes:

(1)   Battery Energy Storage | Flexible Battery Electricity | Fidra Energy
(https://fidraenergy.com/)

(2)   The cash flow that Drax expects to generate over the life of the
contract when compared to the present value of the annual toll payments, is
expected to deliver a return significantly above Drax's WACC.

(3)   Acquisition of 260MW 2-hour BESS portfolio - 07:00:11 30 Oct 2025 -
DRX News article | London Stock Exchange
(https://www.londonstockexchange.com/news-article/DRX/acquisition-of-260mw-2-hour-bess-portfolio/17302365)

(4)   Acquisition of Asset Optimisation Platform - 07:00:06 21 Jan 2026 -
DRX News article | London Stock Exchange
(https://www.londonstockexchange.com/news-article/DRX/acquisition-of-asset-optimisation-platform/17422625)

 

 

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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