Following the reinstatement of the UK capacity market last year, Drax (DRX) has secured agreements to provide 2.6 kilowatts (KW) of capacity to the national grid between October 2022 and September 2023. The government scheme involves auctioning retainer-like contracts to ensure reliable sources of electricity generation are available when needed.
IC TIP:
Buy
at
287p
With a clearing price of £6.44 per KW, the agreements are worth £15m and relate to Drax’s existing gas, pumped storage and hydro assets. Its two coal units were unsuccessful and the group will now “assess options” for these assets. Until a legal challenge against its proposed new gas turbines is resolved, this project will not participate in future auctions.
