Drax Group Plc (LON:DRX) has reported its half-year results for the six months ended 30 June 2026
Delivering energy security, investing for growth
| Six months ended 30 June | 2026 | 2025 |
| Key financial performance measures | ||
| Adjusted EBITDA(1/2) (£ million) | 279 | 460 |
| Net debt(3) (£ million) | 1,025 | 1,062 |
| Adjusted basic EPS(1) (pence) | 29.8 | 65.6 |
| Dividend per share (pence) | 12.9 | 11.6 |
| Total financial performance measures | ||
| Operating profit (£ million) | 265 | 301 |
| Profit before tax (£ million) | 222 | 281 |
Drax Group CEO, Will Gardiner, said: “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.”
Highlights
· Good performance across the Group
· High levels of renewable generation and system support – c.6% of UK power, 10% of UK renewables
· First OCGT commissioned, operational and performing well – c.0.3GW capacity added to portfolio
· Cruachan turbine upgrade progressing, work continuing to resolve grid access restriction
· Strong balance sheet
· £630 million of cash and committed facilities, 1.3x Net debt to Adj. EBITDA
· Sustainable and growing dividend – interim dividend of 12.9 pence per share (H1-25: 11.6 pence per share)
· Expected full year dividend up 11.0% to 32.2 pence per share (2025: 29.0 pence per share)
· Return of surplus capital beyond investment requirements – £48 million share buybacks(4)
· Programme paused in view of proposed acquisition of Bluefield Solar Income Fund (BSIF)
2026 financial outlook
· FY-26 expectations for Adj. EBITDA in line with analyst consensus estimates(5)
Medium-term outlook: addition of c.0.7GW of BESS expected to deliver step change in Adj. EBITDA
· Targeting increased Adj. EBITDA of £650-800m in 2029
· Includes Pellet Production, Biomass Generation, Flexgen(6) and 0.7GW of BESS developments expected to commission from 2027 onwards, supported by Flexitricity platform
· Currently excludes any benefit associated with proposed acquisition of BSIF (expected to become effective on 31 July 2026) and other additional opportunities
· Adjusting cost base and resource in line with needs of new CfD contract, growth strategy and value creation
· Continuing to target annual structural savings of >£150 million pa from 2027 vs. 2024 base
Opportunities for further growth and Adj. EBITDA development
· Proposed acquisition of BSIF for £561 million (enterprise value of c.£1,082 million)
· 0.9GW of solar and wind, plus 2.9GW pipeline of BESS and solar, incl. c.0.5GW of solar with 15-to-20 year CfD
· FY-25 EBITDA of c.£130 million and c.£118 million of operating free cash flow
· Process: on 24 July BSIF shareholders voted 99% in support of the proposed acquisition, and subject to the satisfaction or waiver of other pre-conditions and the sanction of the Scheme at a Court Hearing, the Scheme is currently expected to become effective on 31 July 2026
· Assessing opportunities for further investment in flexible generation and renewables
· Drax Power Station – options to utilise 4GW of grid access capacity
· Developing options for data centre capacity – targeting submission of planning application in H2-26 to support a first phase of 100MW
· Exploring options for additional system support services and generation
Maintaining disciplined capital allocation policy to support investment for growth and returns to shareholders
· Optionality underpinned by strong balance sheet
· Credit ratings reiterated – S&P (BB + stable), Fitch (BB + stable) and DBRS (BBB low) – all post BSIF announcement
· Investment to maintain and grow asset base, targeting returns significantly in excess of WACC
· Sustainable and growing dividend – ten consecutive years of growth with average annual increase >11% pa
· Return of surplus capital beyond current investment requirements
· >£1.2 billion returned via dividend and share buyback since 2017
· Total number of voting rights, excluding treasury shares, as at 29 July 2026 was c.337 million
Governance and sustainability
· Closure of FCA investigation related to certain historical statements regarding Drax’s biomass sourcing and the compliance of Drax’s 2021, 2022 and 2023 Annual Reports – no action taken
· MSCI AA rating (was A rating)
· CDP A rating for climate and forestry – top 4% of companies submitting disclosures
· SBTi targets to 2040 validated
Operating and financial review
| Six months ended 30 June (£ million) | 2026 | 2025 |
| Adjusted EBITDA | 279 | 460 |
| Pellet Production | 64 | 74 |
| Biomass Generation | 159 | 332 |
| Pumped Storage and Hydro | 47 | 64 |
| Energy Solutions | 27 | 18 |
| OCGT | 4 | – |
| Flexitricity | (1) | – |
| Flexible Generation & Energy Solutions | 77 | 81 |
| Other Costs | (21) | (27) |
Pellet Production – US supply chain supporting UK energy security
· Continued focus on operational improvement and efficiency
· Production of 1.9Mt (H1-25: 2.1Mt) reflects closure of Williams Lake in Canada and H2 weighted production aligned to Drax Power Station generation
· Reduction in Pellet Production Adj. EBITDA
· US – progress with cost reduction resulting in lower Pellet Production revenues under established intercompany pricing methodology but lower biomass costs for Biomass Generation
· Canada – good operational performance, constrained fibre market, lower margins
· Ongoing strategic review of Canadian operations
Biomass Generation – UK energy security with dispatchable renewable generation and system support services
· Reduction in Adj. EBITDA primarily reflects lower achieved power price versus H1-25
· Generation of 7.0TWh (H1-25: 7.1TWh) – reflects continuing system support role and buyback of forward sold positions to reallocate generation to expected higher value periods in H2-26
· Major planned outage underway on one unit, expected completion in August 2026
Flexible Generation & Energy Solutions (Flexgen) – flexible generation and system support services
· Pumped Storage and Hydro – strong underlying performance, inclusive of major planned and unplanned outages
· Cruachan planned outage on units 3 and 4 – grid connection failure (December 2025) caused by assets owned by Scottish Power Energy Networks. Drax engaging with SPEN to restore the connection, expected in 2027
· Work continues on a planned c.£80 million investment to refurbish and upgrade units 3 and 4. The programme is expected to continue through 2027 and will add 40MW of additional capacity and improve unit operations
· OCGTs
· First unit (Hirwaun) commenced operations in May 2026, performing well
· Remuneration via peak power generation, system support services and Capacity Market agreements
· Energy Solutions – performing well
· Renewable power supply and services to industrial and commercial users
· Route to market for c.2,000 embedded generators – c.800MW capacity
· Continued development of system support services via demand-side response and electric vehicle services
· Flexitricity – acquired March 2026 for £36 million, net of cash acquired
· Currently providing route to market services for c.0.9GW assets – primarily BESS and thermal
· Expect to use proprietary optimisation platform to support BESS opportunities comprising (i) physical assets and (ii) the capability to optimise third-party assets with the provision of route to market, floor and tolling structures
· BESS – targeting GW-scale pipeline of BESS opportunities and optimisation capabilities
· 710MW in development – physical assets and tolling agreements (Fidra and Zenobē projects, FID taken), expected operational in 2027 and 2028
Contracted generation position to Q1-27
· As at 28 July 2026, c.£1.1 billion of forward power sales between 2026 and 2028 on RO biomass, pumped storage and hydro, and OCGT assets – 13.8TWh at an average price of £82.7/MWh(7/8)
| Contracted power sales as at 23 July 2026 | 2026 | 2027 | 2028 |
| Net RO, hydro and gas (TWh)(7) | 11.5 | 2.1 | 0.2 |
| Average achieved £ per MWh(8) | 83.4 | 80.0 | 70.5 |
| CfD (TWh)(9) | 3.4 | 0.8 | – |
· New CfD for biomass generation from April 2027 – hedged rateably in line with the season ahead index
· Dispatch up to 2.6GW in line with system needs, capturing price volatility associated with growth of intermittent renewables
Other financial information
Capital investment
· Capital investment of £85 million (H1-25: £59 million)
· Growth – £46 million – BESS, Pumped Storage and Hydro upgrades, and OCGTs
· Maintenance and other – £39 million, including major planned outage at Drax Power Station
· FY-26 expected capital investment of c.£210-250 million, before BSIF
· Growth – c.£100 million – BESS, Pumped Storage and Hydro upgrades, and OCGTs
· Maintenance and other – c.£130 million – inclusive of major planned outage at Drax Power Station
Cash and balance sheet
· Cash generated from operations of £79 million (H1-25: £378 million)
· Reflects lower Adj. EBITDA and net working capital increase primarily related to renewable certificates
· Net working capital outflow of £175 million (H1-25: £102 million)
· Net debt of £1,025 million (31 December 2025: £784 million), including cash and cash equivalents of £180 million (31 December 2025: £302 million)
· £450 million Revolving Credit Facility and €135 million term-loan extended to 2029
· Bridging facility agreed, drawdown subject to successful completion of proposed BSIF acquisition
Notes:
(1) Financial performance measures prefixed with “Adjusted/Adj.” are stated after adjusting for exceptional items and certain remeasurements.
(2) Earnings before interest, tax, depreciation, amortisation, other gains and losses and impairment of non-current assets, excluding the impact of exceptional items and certain remeasurements, earnings from associates and earnings attributable to non-controlling interests.
(3) Net debt is calculated by taking the Group’s borrowings, adjusting for the impact of associated hedging instruments, lease liabilities and subtracting cash and cash equivalents. Net debt excludes the share of borrowings, lease liabilities and cash and cash equivalents attributable to non-controlling interests. Borrowings includes external financial debt, such as loan notes, term-loans and amounts drawn in cash under revolving credit facilities. Net debt does not include financial liabilities such as pension obligations, trade and other payables, working capital facilities linked directly to specific payables that provide short extension of payment terms of less than 12 months and balances related to supply chain finance. Net debt includes the impact of any cash collateral receipts from counterparties or cash collateral posted to counterparties.
(4) c.£41 million of share buyback and c.£7 million of shares purchased to satisfy share-based payment arrangements.
(5) As of 23 July 2026, analyst consensus for 2026 Adj. EBITDA was £665 million, with a range of £643 – £681 million. The details of this consensus are displayed on the Group’s website. Consensus is stated before the proposed acquisition of BSIF and Drax expects to provide further updates on the impact of BSIF on the outlook for 2026 in September 2026, subject to completion.
Consensus – Drax Global
(6) Excludes development expenditure and capital projects development.
(7) Presented net of cost of closing out gas positions at maturity and replacing with forward power sales.
(8) Includes de minimis structured power sales in 2026, 2027 and 2028 (forward gas sales as a proxy for forward power), transacted for the purpose of accessing additional liquidity for forward sales and highly correlated to forward power prices.
(9) CfD strike price, c.£142/MWh (Apr-25 to Mar-26) and c.£147/MWh (Apr-26 to Mar-27).
