Drax reports that renewable energy generation will hit a record high in 2025

Investing.com – Drax Group plc announced on Thursday that, for the 12 months ending December 31, 2025, the company’s renewable energy generation reached a record high, accounting for 6% of the UK’s electricity supply and 11% of the UK’s renewable energy generation.

The company’s adjusted EBITDA reached £947 million, down from £1.064 billion in 2024, mainly due to lower electricity prices. Operating profit declined from £850 million to £241 million, primarily due to a total non-cash impairment charge of £378 million.

Drax completed a £300 million share buyback program in October 2025 and launched a three-year, £450 million deferred buyback plan, supported by an expected approximately £500 million in working capital inflows after the renewable obligation scheme ends in 2027.

In November 2025, the company signed a low-carbon, dispatchable power purchase agreement with the UK government covering all four biomass units at Drax Power Station, with a term from April 2027 to March 2031. The agreement specifies approximately 6 terawatt-hours of biomass generation annually, at a strike price of £109.90 per megawatt-hour.

Drax announced a strategic investment in battery storage systems, committing about £500 million for a 710 MW development project. The company also agreed to acquire asset optimization platform Flexitricity for approximately £36 million.

The company’s pellet production business achieved a record output of 4.2 million tons, a 5% increase compared to 2024. However, the Canadian operations faced challenges due to fiber market restrictions and declining profit margins, prompting a strategic review.

Biomass power generation produced 15.0 terawatt-hours of electricity, a new record for the business. The company has no major planned outages in 2025.

Net debt decreased from £992 million at December 31, 2024, to £784 million. The net debt-to-adjusted EBITDA ratio was 0.8x, below the company’s long-term target of approximately 2x.

The board proposed an annual dividend of 29.0 pence per share, an 11.5% increase from 26.0 pence in 2024.

Drax confirmed impairments of £337 million related to its Canadian pellet business and the suspended Longview pellet project, as well as £48 million related to development costs for UK bioenergy carbon capture and storage.

The company is developing a data center plan at Drax Power Station, with an initial phase of about 100 MW potentially starting operations in 2027, subject to necessary permits and agreements.

For 2026, Drax expects adjusted EBITDA to meet analyst consensus estimates of £662 million. The company’s goal is to achieve annual adjusted EBITDA of £600-700 million from pellet production, biomass power, and flexible generation businesses after 2027.

Total capital expenditure in 2025 was £202 million, lower than £321 million in 2024. The company expects capital investments of approximately £210-250 million in 2026.

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