Drax announces £150m share buyback after record profits
The owner of the Drax power plant will give its shareholders a £150m windfall after reporting its highest ever annual profits, thanks in part to record electricity prices.
The FTSE 250 company also said it was pausing investment in its controversial carbon capture project while it waited for more details from the government on a possible subsidy.
Drax told investors it would buy back shares worth £150m after the cost of electricity soared in the wake of Russia’s invasion of Ukraine, helping push the group’s annual profits to £731m for 2022, up from £398m the year before.
It added that it would defer plans to invest about £50m in carbon capture technology at its power plant’s biomass burning units this year while it waits for the government to include the project in its funding scheme.
Will Gardiner, the chief executive of Drax, set out plans to pause the project as it emerged that the energy regulator has opened an investigation into whether the company’s activities are aligned with biomass sustainability rules.
Ofgem has launched the investigation, which will be undertaken by the US consulting group Black & Veatch, amid growing concerns over net zero claims around Drax’s bioenergy plant, according to documents released under a freedom of information request by the Financial Times.
Drax’s own climate scientists advised the company in a report that it should stop saying that its biomass power units were “carbon neutral”, and the firm has faced fierce criticism from green groups for earning about £1.7m a day in renewable energy subsidies for burning wood pellets known as biomass, which are produced from forests in Canada.
There are also growing calls for ministers to scrap subsidies for the plant in its upcoming biomass strategy
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