Drax Group (LSE:DRX) increased adjusted underlying earnings by 21% to £225mln in the first half of the year, up from £186mln a year earlier.
Whereas a portion of the power producer’s revenue was derived from discontinued gas generation in the first half of last year, all its revenue for the recent period was from continuing operations.
It delivered adjusted earnings per share of 20p, an uptick from 14.6p a year ago, and called an interim dividend of 8.4p per share, slightly higher than its 7.5p interim dividend a year earlier.
The power station operator reiterated its expectations for full-year adjusted underlying earnings, which it had revised above analysts’ expectations of £614mln earlier this month.
This was in view of its latest agreement to provide a contingency contract for coal power production this winter. At the government’s behest, Drax agreed to extend the life of its coal-fired power plant in Yorkshire by another six months.
Will Gardiner, chief executive officer of Drax, said it plans to invest £3bn in renewables in the UK and US as it expands pellet production to meet rising demand.
“As the UK’s largest generator of renewable power by output, Drax plays a critical role in supporting the country’s security of supply,” he said.
“We are accelerating our investment in renewable generation, having recently submitted planning applications for the development of BECCS at Drax Power Station and for the expansion of Cruachan Pumped Storage Power Station.”
Drax said in the trading update that it has Renewables Obligation Contracts in place for 11.7 TWh of power sales this year and 8.8 TWh of power sales next year.
This month, it opened a new sales office in Tokyo and submitted plans to expand the Cruachan pumped storage hydroelectric power plant in Scotland.
In addition, it expects to reach full production capacity in the second half of the year at two pellet plants in the US, the Demopolis plant in Alabama and Leola plant in Arkansas.
This week the power station released documents outlining a plan to reduce emissions with a new carbon capture and storage project. Reports suggested this may involve a decline in energy production, possibly falling by as much as 28%.
Once a coal power station operator, Drax now runs four 600MW-plus generating units on "sustainable biomass" and is installing equipment at its Yorkshire power station to capture additional carbon emissions.
After embarking on switching its coal plants to biomass about a decade ago, the power producer said it is targeting biomass capacity and sales of “8Mt of capacity and 4Mt of sales to 3rd parties by 2030”.
Drax shares rose 1.59% by 10:48 this morning.