Drax has secured a government-backed support mechanism for all four biomass units at Drax Power Station from April 2027 to March 2031.
The contract is a low-carbon dispatchable Contract for Difference. In practical terms, that means Drax will be paid within a framework designed for generation that can respond when the grid needs it most. When electricity supply is tight, the station can raise output. When supply is high, it can reduce generation and help balance the system. That operating role matters because the UK grid needs more controllable power as renewable generation increases and weather-driven volatility becomes more important.
Drax is making the case that the power station remains important to UK energy security into the 2030s. The company says the plant can help reduce the need for additional gas generation or imported electricity from Europe when supply is under pressure. That strengthens the argument that the asset still has a defined place in the market rather than facing a gradual loss of relevance.
The company is also presenting the agreement as positive for customer costs. Based on analysis it cites from Baringa, the mechanism is expected to generate net savings for consumers of between £1.6 billion and £3.1 billion over the life of the contract compared with other forms of dispatchable generation. Drax also says savings could be higher if gas prices rise sharply.
Drax says the power station provided enough power in 2024 for about five million homes and supplied an average of 5% of the UK’s energy across the year. On low-wind, low-sunlight days, that could rise to as much as 8%. The company also notes that the station’s capacity is greater than that of the UK’s two largest operational nuclear power stations.
Drax Group plc (LON:DRX), trading as Drax, is a power generation business. The principal downstream enterprises are based in the UK and include Drax Power Limited, which runs the biomass fuelled Drax power station, near Selby in North Yorkshire.
