Drax, the FTSE 250 power generator best known for its converted coal plant in North Yorkshire, has upgraded its profit outlook for 2026 after a strong run through the summer.
The group now expects full-year adjusted earnings before interest, tax, depreciation and amortisation to come in around the top of the range analysts had forecast.
City consensus stood at £698 million, within a range of £680 million to £711 million, so the guidance points to a figure near the upper end.
The improvement was driven by a strong operational performance in July and August, as Drax's plants ramped output up and down to help balance the grid through the heatwave.
A broader energy business
The upgrade also reflects the completion of Drax's £561 million acquisition of Bluefield Solar Income Fund, an investment fund holding solar and wind assets, which closed on 31 July.
The deal added around 0.9 gigawatts of operational solar and onshore wind, along with a development pipeline of 2.9 gigawatts of solar and battery storage.
It takes total capacity under Drax's management to roughly 6.1 gigawatts and pushes the group beyond its traditional biomass and flexible gas operations.
Chief executive Will Gardiner said the addition brought significant benefits and a chance to grow the group's asset base and system services further.
Deal funding and debt
Drax drew £800 million under a short-term bridge facility to fund the purchase and repay some of Bluefield's existing borrowings, and expects to refinance that facility in time.
The company targets net debt of around two times adjusted earnings over the long run, but expects to sit above that level in 2026 before reducing it back to target by the end of 2027.
Total capital spending for the year is still pencilled in at £210 million to £250 million.
Selby ambitions
Drax pointed to longer-term plans at its Selby site, where it holds four gigawatts of grid access and is developing options including a large-scale data centre.
A first phase of around 100 megawatts is being lined up, with a planning application due in the coming months.
The group has also substantially contracted the biomass volumes it needs for its new low-carbon subsidy deal, which runs from April 2027 to March 2031.
More detail on its growth plans is expected at a capital markets day on 23 November.
