Drax Group (LSE:DRX) PLC shares topped the FTSE 350 after the power company said it will burn coal this winter after a request from the government, leading it to upgrade its full-year profit guidance.
Shares in the FTSE 250 group rose 7.2% to 669p in early trading on Thursday.
As part of an agreement with National Grid PLC (LSE:NG.) to provide a contingency service to the UK power system until the end of March 2023, the two coal-fired units will only generate if and when instructed, it said in a statement overnight.
It said the agreement was in response to “increased pressure on European gas markets and associated concerns about electricity security of supply in the UK this winter”, following Russia's invasion of Ukraine.
Drax will be paid a fee for the service and compensated for costs incurred, including coal costs.
The Yorkshire-based power company also said it expects to provide “additional support” from pumped-storage hydroelectric power from its Cruachan Power Station.
Reflecting the coal contract and “reprofiling biomass generation”, Drax said it now expects full-year adjusted earnings (EBITDA) for 2022 will be “slightly above the top” end of analyst expectations, which had ranged from £584mln all the way to £635mln.