Drax UK reports increased annual profits, boosted by renewable energy

The British power company Drax Group reported on Thursday a 5.5% rise in its annual profit. This was in line with expectations and was due to a higher generation of renewable energy and boosted performance in the pellet division.

Drax, a company that has converted coal-fired plants to run on biofuels, supplies around 6% (or 6,000 MWh) of Britain's electric power.

The government announced earlier this month that it would extend subsidies for biomass units due to expire by 2027, but only at half their current amount.

The government has said that under the new subsidy scheme, plants will only run when power is required.

In the results announcement, CEO Will Gardiner stated that the new deal is "a major milestone for business and provides a basis for the site to continue to generate electricity in the country."

The company reported that biomass power production increased by 27% last year, compared to 2023. There were few maintenance interruptions.

The company's earnings for 2024 were reported at 1.06 billion pounds ($1.34billion) before depreciation, interest, taxes, and amortization.

Green groups who oppose the use of biomass claim that the production of pellets can contribute towards deforestation, and they question whether the process for burning the pellets really is sustainable.

The company claims that its pellets are made from wood residues or byproducts of trees used primarily for lumber. It also says that sustainably managed forest can increase forest growth. ($1 = 0.7899 pounds)

(source: Reuters)