Power company Drax says its 2025 earnings will be at the top end of expectations after a strong year.
Analysts have suggested the North Yorkshire-based company could generate adjusted Ebitda of £874m, with a range of £848-£896m. Drax said it had performed well across its FlexGen, Pellet Production and Biomass Generation divisions.
In a trading update ahead of half year results at the end of July, the group pointed to progress within its flexible renewable generation operation.
That included an £80m investment to refurbish and upgrade two units at Cruachan Power Station in Scotland in a project underpinned by a 15-year Capacity Market agreement worth more than £220m.
Meanwhile commissioning of three new-build open cycle gas turbines at sites in central England and Wales are expected to start this year with the first unit due to enter service this summer - later than planned.
The turbines will provide about 900MW of capacity under 15-year Capacity Market agreements worth more than £250m.
At the end of April, Drax had about £2bn of contracted forward power sales between 2024-2027 on its Renewable Obligation biomass, pumped storage and hydro generation assets. That equated to 21.1TWh at an average price of £93.6MWh.
Drax Group CEO Will Gardiner said: "Through delivering strong operational performance we have supported energy security. Thousands of workers at Drax and throughout our supply chain keep the lights on for millions of this country's homes and businesses.
"The º£½ÇÊÓƵ's target for a clean power system and increase in intermittent renewables means more dispatchable and reliable generation will be required to help keep the lights on when the wind isn't blowing or the sun isn't shining.
"We are working to create value and growth in the short, medium and long-term, aligned to the º£½ÇÊÓƵ's energy needs and underpinned by a strong balance sheet and cash generation, a disciplined approach to capital allocation and attractive returns for shareholders."
Last week, a cross-party group of MPs warned that companies like Drax that burn wood pellets to make energy may be "marking their own homework" on sustainability. The Public Accounts Committee said certification schemes, which aim to ensure biomass used in the º£½ÇÊÓƵ has been sustainably sourced, may not be strong enough.
The Government has provided £22bn in public subsidies to businesses and households that use biomass, with £6.5bn going to Drax.
In its latest trading update Drax pointed to a new Sustainability Framework is published in February, which it said is underpinned by an updated Biomass Sourcing Policy which reflects changes in biomass standards and regulation.
