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Drax' 2016 renewable share at 65%, EBITDA down as expected

Drax power plant. Author: Gareth Davies. License: Creative Commons, Attribution-ShareAlike 2.0 Generic.

Feb 16 (Renewables Now) - UK power producer Drax Group Plc (LON:DRX) today announced that 65% of its electricity in 2016 was from biomass, which compares to a 43% share a year earlier.

Since 2012 the company has converted to biomass three of the six coal-fired power generators at the Drax power station in Derby. It aims to someday deliver 100% reliable biomass generation from the plant in Derby.

“A new Prime Minister, a newly created department in BEIS (Department for Business, Energy and Industrial Strategy), and changes to their respective teams mean new opportunities to make the case for further biomass upgrades at Drax,” the power producer said, on releasing its preliminary 2016 financial report. The firm has pellet manufacturing facilities in Mississippi and Louisiana, which are working at full capacity.

Following a review that started in 2015, Drax has decided to focus more on low-carbon energy, a plan that includes the construction of four Open Cycle Gas Turbine generation plants.

2016 results

Drax’s earnings before interest, tax, depreciation and amortisation (EBITDA) for 2016 fell by 17% to GBP 140 million (USD 174.2m/EUR 164.7m). It said weak commodity markets affected the result, and EBITDA also lost GBP 34 million because of the removal of the Climate Change Levy exemption for renewables.

(in GBP million, unless specified) 2016 2015
EBITDA 140 169
Underlying earnings 21 46
- per share (in pence) 5.0 11.3
Net debt 93 187
Profit before tax 197 59
Reported basic earnings per share (in pence) 48 14

"2016 was a year of significant change for the UK Government, not least with the Brexit vote and its implications. Our strategy of long-term hedging against currency fluctuations ensured we were protected against a negative impact on the cost of our predominantly US dollar and Euro denominated biomass supply."

(GBP 1 = USD 1.25/EUR 1.18)

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Browse all articles from Tsvetomira Tsanova

Tsvet has been following the development of the global renewable energy industry for seven years now. She's got a soft spot for emerging markets.

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