Britain’s electricity system is moving towards a model that will require more renewable generation, more storage and more flexible power. Drax is positioning itself across several of these areas as the country works to manage a more variable supply of electricity while meeting rising demand.
Wind and solar already provide around 40% of Britain’s electricity generation. Their expansion is reducing reliance on imported gas, but it is also creating new challenges for the system. Renewable output can fall sharply when weather conditions change, while periods of excess generation can result in curtailment and negative power prices.
Adding renewable capacity alone will not resolve the problem of matching supply with demand. The system also needs assets that can store electricity when supply is high and release it when supply falls.
Drax is developing a portfolio aimed at this requirement. Alongside its existing generation operations, the company is pursuing new wind and solar projects, battery storage and longer-duration energy storage. The combination gives it exposure to several parts of the infrastructure needed to support a more renewable electricity system.
The timing of these investments will depend partly on the wider delivery of Britain’s electricity infrastructure. Grid connections remain a constraint for new generation and storage projects, with developers facing uncertainty over when capacity will become available. Faster and more predictable connections would allow projects to move into operation sooner and help bring additional supply and flexibility onto the system.
Electricity demand is also set to become more significant. The electrification of transport, heating and industry is increasing the amount of power required, while data centres are creating another source of demand. Higher electricity consumption could help improve the utilisation of existing infrastructure, although it will also increase the need for generation and network investment.
Long-duration storage is particularly relevant as the proportion of wind and solar increases. Batteries can respond quickly to short periods of imbalance, but longer periods of low renewable output require technologies capable of maintaining supply for much longer. Britain can experience several consecutive days of limited wind generation, creating a requirement for resources that can bridge these periods.
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.
