Drax reports record renewable generation in 2025
By Josh White
Date: Thursday 26 Feb 2026
(Sharecast News) - Drax Group reported record 2025 renewable generation on Thursday, and set out plans to return more than £1bn to shareholders, as it targeted up to £700m of adjusted EBITDA annually beyond 2027 and advanced investments in flexible generation and battery storage.
For the year ended 31 December, adjusted EBITDA fell to £947m from £1,064m, while operating profit declined to £241m from £850m, reflecting non-cash impairment charges including £337m related to the Canadian pellet business and the paused Longview project, and £48m on UK BECCS.
Profit before tax dropped to £190m from £753m.
Adjusted basic earnings per share rose to 137.7p from 128.4p, benefiting from share buybacks and lower net finance costs.
The full-year dividend increased 11.5% to 29.0p per share.
Net debt reduced to £784m from £992m, equivalent to 0.8x net debt-to-adjusted EBITDA, with £942m of cash and committed facilities available.
Cash generated from operations was £1bn, while capital investment totalled £202m, down from £321m in 2024.
"In 2025, we produced more renewable power than ever before, delivering energy security for the UK," said chief executive Will Gardiner.
He added that the signing of the new low carbon dispatchable contract for difference was "an inflection point for the group", providing a foundation to support UK energy security "this decade and beyond".
The group generated 15.0TWh of renewable power during the year, accounting for 6% of UK power and 11% of UK renewables.
Pellet production reached a record 4.2Mt, up 5% year-on-year, although pellet production adjusted EBITDA declined to £129m from £143m, reflecting lower margins in Canada and changes to intercompany pricing.
Drax said it was reviewing strategic options for its Canadian pellet operations amid a constrained fibre market.
Biomass generation adjusted EBITDA was £725m, down from £814m, with lower achieved power prices partly offset by savings including a lower Electricity Generator Levy, which was nil in 2025 compared with £161m in 2024.
As at 24 February, Drax had around £1bn of forward power sales between 2026 and 2028, covering 13.3TWh at an average price of £78 per MWh, with RO generation fully hedged in 2026 and substantially hedged to March 2027.
Within flexible generation and energy solutions, adjusted EBITDA was £160m, compared with £188m in 2024.
Pumped storage and hydro operations were impacted by outages at Cruachan following a grid connection failure in December, with units three and four currently unavailable pending repairs by network operator SPEN.
The group said it expected to take commercial control of its first open cycle gas turbine at Hirwaun in March.
Drax said it had committed around £0.5bn to 710MW of battery energy storage system developments and the acquisition of optimisation platform Flexitricity, expected to complete around March.
It was also developing options for a 1.2GW-scale data centre at Drax Power Station, targeting an initial 100MW from 2027 subject to consents.
The FTSE 250 company completed a £300m share buyback programme in October and had begun a £450m three-year extension, supported by an expected £0.5bn working capital inflow following the end of the Renewables Obligation scheme in 2027.
It said it was targeting around £3bn of free cash flow from the existing business between 2025 and 2031 before growth investment, with about £0.5bn delivered in 2025, and expected to return over £1bn to shareholders through dividends and buybacks.
Looking ahead, Drax said full-year 2026 adjusted EBITDA was expected to be in line with analyst consensus of £662m.
Beyond 2027, it said it was targeting adjusted EBITDA of £600m to £700m per annum from pellet production, biomass generation and flexible generation, alongside annual structural cost savings of more than £150m from 2027 compared with a 2024 base.
Gardiner said the energy transition and growth in AI were "creating opportunities for us to invest and grow our business further in line with the country's energy needs", adding that the group would "continue to explore options to invest in flexible and renewable energy, creating value for stakeholders and attractive returns for shareholders in line with our capital allocation policy."
At 0844 GMT, shares in Drax Group were up 5.04% at 927p.
Reporting by Josh White for Sharecast.com.
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