Drax, the energy company operating the Selby power station, has announced an increase in its interim dividend to 12.9p per share, even as first-half profits declined sharply. Adjusted earnings before interest, tax, depreciation, and amortisation (ebitda) fell from £460 million in the first half of 2025 to £279 million in the same period this year. Operating profit also decreased, dropping from £301 million to £265 million. Despite these declines, the company raised its dividend from 11.6p per share in the first half of 2025, signalling confidence in its growth strategy.
Financial Performance and Market Context
Drax attributed the lower earnings to a normalisation of energy markets after a period of volatility. However, the company described the results as a good performance across its portfolio, which is expected to expand significantly through the proposed acquisition of Bluefield Solar Income Fund (BSIF). The acquisition would bring additional solar and wind generation assets to Drax's existing biomass and hydro operations. Bosses indicated that the deal, combined with investments in battery energy storage and open cycle gas turbine (OCGT) technology, could increase the group's generation capacity by approximately 85% compared to 2025 levels.
Operational Highlights and Renewables Contribution
Over the first half of 2026, Drax supplied about 6% of the UK's power and 10% of the country's renewable electricity. The company also noted progress in upgrading equipment at its Cruachan Power Station, a pumped-storage hydro facility in Scotland. These investments are part of Drax's broader transition from a single-site biomass generator to a multi-site operator employing a diverse range of generation technologies.
Dividend Increase and Shareholder Returns
Alongside the interim dividend hike, Drax announced an expected full-year dividend increase of 11%, bringing the projected total to 32.2p per share. This reflects the board's confidence in the company's future earnings potential and its ability to generate cash flows from its expanding portfolio. The dividend increase comes despite a challenging environment marked by geopolitical uncertainty and adverse weather conditions, which have tested the resilience of the UK's energy infrastructure.
CEO Commentary on Strategic Direction
Will Gardiner, Drax Group CEO, commented: "Drax has delivered a good performance in the first half. Our 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 and challenging weather. We are at a key moment in Drax's transition, investing to create a larger and broader portfolio with more MWs under management that can provide more power to the country when needed. Over the years we have grown the business from a single-site biomass generator to a multi-site portfolio operating a broader range of generation technologies. Critically, through our growth plans for batteries, OCGTs and our Selby site, we are driving economic growth across the country, in alignment with the policy priorities of the UK Government. We are also actively developing options for more renewables, including the proposed acquisition of Bluefield Solar Income Fund, and our trading and optimisation platform. Taken together we believe that these actions can support energy security and will increase the Group's generation capacity by around 85% compared to 2025. As a result, we expect to increase our earnings, deliver value for our stakeholders, support growth and attractive returns for shareholders."
Future Outlook and Growth Ambitions
The proposed Bluefield acquisition is seen as a transformative step, not only adding renewable capacity but also diversifying Drax's revenue streams. The company's investment in battery storage and gas turbines aims to provide flexible generation to balance the grid as intermittent renewables like wind and solar become more prevalent. Drax's Selby site, which houses the biomass plant, remains central to its operations, and the company is exploring options for further development there. With these initiatives, Drax projects a significant increase in earnings and capacity, reinforcing its role in the UK's energy transition while delivering returns to shareholders.
