Drax posts b2b supply growth, massive pellet production gains, but outages hit earnings

Drax power station: Creative Commons/Paul Glazzard

Drax Group reported increased earnings and market share for its business-to-business supply operations, but outages within its generation business hit profit for the six months to 30 June.

Earnings before interest, taxes, deductions and amortisation (Ebitda) fell 16% to £101m. Underlying earnings fell 22% to £7m.

The firm owns what was once Europe’s largest coal-fired power station, which it has partially converted to biomass and plans to convert some units to gas.

Drax has built a significant biomass pellet business, importing wood from South Georgia to fuel three generation units, with a fourth to be commissioned late summer.

The company said it increased year on-year-pellet production by 80% to 700,000 tonnes, with cost per tonne down 12%.

An outage on a rail unloading building hit two biomass generating units in January and one generating unit had an outage in February. Nevertheless, 71% of its generation was from biomass in the first half, up from 68% in H1 2017.

Ebitda for its power generation business fell 36% to £88m, with lower ancillary services revenue contributing to the result. However, the firm said it was “confident” in the growing requirement for system support services.

Meanwhile, the company’s business energy supply operation is delivering growth. Drax owns Haven Power (which sells to mostly larger firms) and Opus Energy, which has more SMEs on its books.

Ebitda for its supply business increased 33% to £16m, with meter points up 9% to 387,000. The firm now claims an 11% share of the SME supply market.

Drax also reported growing demand from b2b customers for flexibility and demand management services. Haven Power struck a deal to make aggregator Kiwi Power its preferred demand-side response partner last year.

Drax shares fell 6% in early trading.

Related stories:

Opus and Haven bolster Drax bottom line

Drax to buy Opus for £340m

Opus sale lifts Utility Warehouse profit

Drax to convert fourth unit to biomass

Drax revisits carbon capture and storage

New chief at Drax as Dorothy Thompson steps down

Drax rules out domestic energy retail but keen to eat b2b suppliers’ lunch

Drax halts CCS investment seeks support for fourth biomass unit

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