Power giant Drax has issued an upbeat trading update, emphasizing its role in supporting UK energy security during a critical period marked by the Middle East conflict. The FTSE 250 company operates the country's largest power station in Selby, North Yorkshire, which generates at least 5% of the UK's electricity, predominantly from sustainable biomass.
The firm reported that a strong performance across the group means its full-year 2026 adjusted EBITDA is expected to align with estimates of £665 million, subject to continued operational excellence. Drax produces over 5% of the UK's electricity and around 10% of its renewable power, with this share rising to 18% during peak demand and exceeding 50% on certain days.
Amid the geopolitical tensions in the Middle East, Drax stated it is helping to stabilize the UK power system. The company highlighted that its focus on flexible, dispatchable generation and renewables enables it to support a secure, lower-cost UK power system that can continue to decarbonize. This approach allows more intermittent renewables to operate and reduces the UK's exposure to high gas prices and reliance on imported power.
The group's supply chain boasts a high level of operational redundancy, with limited exposure to underlying commodity prices. Drax sources biomass primarily from North America, including from its own facilities in the US South. To maximize output during high demand, the company is optimizing generation across its portfolio to deliver power when it is most needed.
Meanwhile, Drax's Pellet Production business is performing well, with a continued focus on cost reduction in its US operations, supporting UK energy security through biomass generation at Drax Power Station. A strategic review of the group's Canadian operations is ongoing.
Drax added that against the backdrop of growing demand for energy security, it sees 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.
Will Gardiner, CEO of Drax Group, said: 'We have started the year well and 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.'
Gardiner added: '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.'
In February, Drax confirmed a major restructuring that will result in 350 redundancies as part of plans to build a strong, resilient business for the future. The firm stated it is focused on driving growth in its flexible generation business, leading to the restructure. A consultation process is underway with affected staff in Yorkshire and North America.
