Drax Group (LSE:DRX) PLC has forecast that its 2022 adjusted EBITDA will now be slightly above the top of the range of analyst expectations boosted by higher prices and a strong performance from its pumped storage and hydro assets in the second half.
The FTSE 250-listed group put this range at £651mln to £681mln and also said it remained on track to be significantly below 2 times net debt to adjusted EBITDA by the end of 2022.
The power generator said costs for its biomass pellet business have continued to rise and are expected to increase further in 2023.
Further investment is planned in new production capacity with two new pellet production projects - a 450kt new-build pellet plant at Longview (Washington State) and a 130kt expansion of its Aliceville site (Alabama) approved.
The combined investment in these projects is expected to be in the region of $300mln and the company is expected to begin commissioning in 2025.
In its generation business, Drax said as of 8 December it had 28.3TWh of contracted power sales between 2022 and 2024 on its ROC and hydro generation assets at an average price of £135.8/MWh, with a further 1.4TWh equivalent of gas sales.
Drax currently expects its all-in contracted cost of biomass for the UK generation business to be over £100/MWh in 2023 which is above the historic average.
The group has also agreed a new £200mln credit facility with banks within its lending group.
The facility provides an additional source of liquidity to the group's undrawn £300mln revolving credit facility, over the next 12 months.