REG - Drax Group Plc - Trading Update

DraxAnnouncement

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RNS Number : 4793C  Drax Group PLC  30 April 2026

30 April 2026

Drax Group plc

("Drax", "the Group", "Drax Group", "the Company"; Symbol: DRX)

 

Trading Update - supporting the UK power system with reliable and renewable
energy

 

Highlights

·   Good operational performance across the Group

·   Full year 2026 expectations for Adj. EBITDA((1)) in line with consensus
estimates((2))

·   £450m buyback - first £75m tranche complete, second £75m tranche to
commence May 2026

·   Final dividend of 17.4 pence per share, subject to shareholder approval
at today's AGM

·   Flexitricity acquisition complete

 

Drax Group CEO, Will Gardiner, said: "We have started the year well and have
delivered a good operational performance across the Group, supporting UK
energy security at a critical time for the country. Our assets, colleagues and
supply chain partners have been working hard to help keep the lights on for
millions of UK households and businesses through a period of acute
geopolitical uncertainty.

 

"We are at a key moment of transition in our business and in the UK's energy
system. With our first battery storage projects and the commissioning of our
first OCGT unit progressing, we are growing our UK FlexGen portfolio.

 

"We are excited about the potential opportunities to invest further to help
the country meet its growing energy needs. We believe these opportunities
could create value for stakeholders and offer attractive returns for
shareholders, in line with our capital allocation policy."

 

Full year expectations

Drax continues to expect 2026 full year Adj. EBITDA to be in line with
consensus estimates((2)). Full year expectations remain subject to continued
good operational performance.

 

Impact of conflict in the Middle East

The Group's focus on flexible, dispatchable generation and renewables enables
it to support a secure, lower cost UK power system, which can continue to
decarbonise, by allowing more intermittent renewables to operate and helping
to reduce the UK's exposure to higher gas prices and reliance on imported
power.

 

The Group produces on average over 5% of the UK's electricity and around 10%
of its renewable power, up to 18% at times of peak demand and on certain days
over 50%((3)). The Group's supply chain has a high level of operational
redundancy, with limited exposure to underlying commodity prices, sourcing
biomass primarily from North America, including from the Group's own
facilities in the US South.

 

To help maximise output at times of high demand, the Group is continuing to
optimise generation across its portfolio to deliver power when it is needed
most.

 

Regulatory update

In April 2026, the UK Government announced its intention to remove the UK
Carbon Price Support (CPS) mechanism from April 2028, which has been used over
the last decade to encourage a reduction in fossil fuel use, contributing to
the phase out of coal generation from the UK power system. The change to CPS
does not change the Group's expectations.

 

In January 2023, the UK Government introduced the Electricity Generator Levy
(EGL) in response to higher wholesale power prices. In April 2026, the
Government announced an extension of the scheme beyond March 2028 and an
increase in the levy. Drax does not currently expect to pay any EGL in 2026
and does not expect it to have any impact on Adj. EBITDA in 2026. From April
2027 Drax Power Station will operate under a CfD agreement which is not
subject to the EGL.

 

FlexGen

Pumped Storage - Cruachan Power Station

Units 1 and 2 are continuing to perform well, providing flexible power
generation and a wide range of system support services.

 

An investment to refurbish and upgrade two units is progressing, with units 3
and 4 undertaking a planned outage programme through 2026 and 2027. The
project is underpinned by a 15-year Capacity Market agreement worth over £220
million((4)) (c.£15 million Adj. EBITDA pa) and will add 40MW of additional
capacity and improve unit operations.

 

In late December 2025, a grid connection failure caused by assets owned by
Scottish Power Energy Networks (SPEN) has resulted in an ongoing forced outage
on units 3 and 4. SPEN is working with Drax to restore the connection.

 

Open Cycle Gas Turbines (OCGTs)

Drax expects to assume control of Hirwaun Power Station (Hirwaun), in South
Wales, shortly. Hirwaun is the first of three 299MW OCGT plants which Drax is
developing in England and Wales.

 

Battery Energy Storage System (BESS)

In March 2026, Drax completed the acquisition of Flexitricity, an optimiser of
flexible energy assets, with a scalable platform expected to support the
Group's ambition to develop a GW scale pipeline of BESS opportunities.
Flexitricity's capabilities complement acquisitions and agreements put in
place by Drax between October 2025 and February 2026 for c.710MW((5))
(c.1.8GWh) of physical assets and tolling contracts, for total commitments of
c.£500 million. Operations are expected to commence from the end of 2027.

 

Drax is continuing to explore a pipeline of additional opportunities.

 

Capacity Market agreements

In March 2026, Drax provisionally secured agreements to provide a total of
434MW of capacity (de-rated 399MW) principally from its pumped storage and
hydro assets((6)). The agreements are for the delivery period October 2029 to
September 2030, at a price of £27/kW/year((7)), with income of c.£11 million
in that period. These are in addition to agreements for existing assets which
extend to September 2029.

 

Taken together with existing agreements for pumped storage, hydro and OCGTs,
Drax has c.£650 million of index-linked Capacity Market agreements, providing
high-quality earnings which extend visibility of the Group's contracted
earnings to 2043.

 

Pellet Production

The Group's Pellet Production business is performing well, with a continued
focus on cost reduction in its US operations, supporting UK energy security
via biomass generation at Drax Power Station. A strategic review of the
Group's Canadian operations is ongoing.

 

Against the backdrop of growing demand for energy security Drax continues to
see long-term potential for new and existing markets for bioenergy, which can
offer an alternative to fossil fuels, including in the production of
sustainable aviation fuels and other industrial processes.

 

Biomass Generation

Drax Power Station, the UK's largest single source of 24/7 renewable power, is
performing well, supporting UK energy security with flexible and reliable
renewable power generation and a wide range of system support services. A
major planned outage on one unit is scheduled for the summer.

 

Generation contracted power sales

As at 28 April 2026, Drax had over £1 billion of contracted forward power
sales between 2026 and 2028 on its Renewables Obligation (RO) biomass, pumped
storage and hydro generation assets, with over £800 million of associated
ROCs. RO generation is fully hedged for 2026. Since its last update on 26
February 2026, the Group has continued to optimise output as the market has
moved, adding 0.2TWh (net) to this position at an average price of
£200.9/MWh.

 

 Contracted power sales as at 28 April 2026      2026  2027      2028  Total
       Net RO, hydro and gas (TWh)((8))          11.1  2.1((9))  0.2   13.4
       Average achieved £ per MWh((10))          79.7  79.4      70.6  79.6
       Contract for Difference (CfD) (TWh)       2.9   -         -     2.9

 

Capital returns

In July 2025, Drax announced a share buyback programme for the purchase of up
to £450 million of Drax shares. The programme commenced in October 2025 with
a first £75 million tranche, which completed in April 2026. A second £75
million tranche is expected to commence in May 2026.

 

The total number of voting rights in Drax Group, excluding treasury shares, as
at 28 April 2026 was c.336.2 million.

 

In February 2026, a final dividend of 17.4 pence per share was proposed,
subject to approval at the 2026 Annual General Meeting (today, 30 April 2026).

 

Strategy

Drax is continuing to assess opportunities to invest in energy security,
primarily in flexible and renewable energy in the UK, which could support
earnings growth.

 

The Group continues to evaluate opportunities to maximise value from the Drax
Power Station site, including the potential for a c.100MW data centre (with an
ambition to grow to a >1GW data centre post 2031), as well as other
generation sources.

 

The Group is also assessing options for other renewables projects to
complement its portfolio.

 

Other matters

Drax will report its half year results on Thursday 30 July 2026.

 

Notes:

(1)   Earnings before interest, tax, depreciation, amortisation, excluding
the impact of exceptional items and certain remeasurements.

(2)   As of 23 April 2026, analyst consensus for 2026 Adj. EBITDA was £665
million, with a range of £643 - £682 million. The details of this consensus
are displayed on the Group's website.

Consensus - Drax Global (https://www.drax.com/investors/consensus/)

(3)   Measured by output Q1 2025 to Q4 2025. Source: Drax and Elexon.

(4)   2025, real-terms.

(5)   In October 2025, Drax signed an agreement with Apatura Limited to
acquire three BESS projects, which when fully commissioned will provide
capacity totalling 260MW. All transactions have now completed and are expected
to begin entering service from late 2027 onwards.

In February 2026, Drax signed tolling agreements with Fidra and Zenobē for
450MW (1.3GWh) of BESS. Under the agreements Fidra and Zenobē 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
from the commercial operation date, in return for full operational control and
dispatch rights, and retaining all revenues (excluding Capacity Market and
certain other ancillary revenues). The assets are expected to enter service
from 2028.

(6)   Cruachan Pumped Storage (units 1 and 2), the Lanark and Galloway hydro
schemes (Bonnington, Carsfad, Drumjohn, Earlstoun, Kendoon, Stonebyres,
Tongland) and three small legacy gas turbines at Drax Power Station.

(7)   Capacity Market T-4 2029/30 auction real clearing price, with clearing
price indexed to UK CPI prior to Delivery Year.

(8)   Includes 0.1TWh of structured power sales in 2026 (forward gas sales
as a proxy for forward power), transacted for the purpose of accessing
additional liquidity for forward sales from RO units and highly correlated to
forward power prices.

(9)   Contracted power sales to March 2027 for biomass units operating under
the RO, after which the units will operate under a CfD mechanism.

(10) Presented net of cost of closing out gas positions at maturity and
replacing with forward power sales.

 

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: 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 conflict
including those in the Middle East and Ukraine, 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, changes to the regulatory and
compliance environment within which the Group operates. Drax 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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