Drax has signed an agreement with Apatura to acquire three battery energy storage system (BESS) projects, which when fully commissioned will provide capacity totalling 260MW. Drax will pay a fixed amount of £157.2 million in staged payments between 2025 and 2028, reflecting construction milestones and including payments to Apatura linked to their delivery of the projects. Completion of the acquisition of the first two projects is expected to occur in 2025 with completion of the third project expected in Q1 2026.
Drax Group CEO, Will Gardiner said, “This acquisition is our first investment in short duration storage as part of our FlexGen portfolio, supporting UK energy security and a clean power system.
“We are looking forward to working with Apatura on the development of battery storage, which when commissioned will allow us to provide even more secure power to the country when it is needed. In combination with our long duration energy storage, flexible generation and renewable generation from biomass, we will be able to provide 4.4GW of dispatchable generation to meet demand.
“As the UK’s network increases its reliance on intermittent renewables, more dispatchable and reliable generation will be required to help keep the lights on when the wind isn’t blowing or the sun isn’t shining.
“Through the development of our strategy we are working to create value and growth in the short, medium and long-term, aligned to the UK’s energy needs and underpinned by strong cash generation, a disciplined approach to capital allocation and attractive returns for shareholders, significantly in excess of our weighted average cost of capital.”
Linked to the transaction, Drax has agreed the option of a right of first offer over a further eight sites (289MW) being developed by Apatura, creating optionality for the continued development of the FlexGen portfolio.
Strategic fit
The Group’s FlexGen business currently comprises long duration pumped storage, hydro and Open Cycle Gas Turbines (OCGTs), but not short duration BESS with fast response capabilities. Drax believes that once commissioned, two-hour BESS provides as an attractive entry point into the short duration storage space, and complementary to the Group’s FlexGen business, allowing it to provide a wider range of system support services, as well as increased access to wholesale and balancing markets.
Once the BESS assets are operational, the Group’s FlexGen portfolio will comprise 1.8GW of long and short duration storage and flexible generation across nine sites in England, Scotland and Wales, with access to demand side flexibility through the Group’s Industrial & Commercial customer portfolio. Drax Power Station provides 2.6GW, taking the Group’s total to 4.4GW of dispatchable generation.
