ENERGY giant Drax has underlined the importance of the company’s renewable energy assets in Scotland to its strategy after offloading gas-fired power stations in a deal worth up to around £200 million.
Drax said the sale of the four gas-fired stations would help accelerate its drive to become a carbon negative business by 2030.
The company expects to be able to achieve that target by focusing on renewable energy generation sources and by using carbon capture storage technology to handle its remaining emissions and those produced by other firms.
READ MORE: Energy giant considering plans for massive investment in power plant in Argyll hills
Drax revealed yesterday that renewable energy generating assets in Scotland account for around 20 per cent of its current capacity. A spokesperson said the hydro assets concerned are absolutely central to the company’s carbon negative ambition.
They include the Cruachan pumped storage plant in the Argyll hills and two hydroelectric facilities on rivers in south west Scotland.
Drax acquired the renewable energy assets from ScottishPower in 2018 in a £700 million deal. The portfolio acquired from ScottishPower also included the four gas-fired plants in England that Drax has agreed to sell to VPI Holding, for up to £193m.
Drax said it expects to record a profit on the deal, and a return over the period of ownership significantly ahead of its cost of capital.
Chief executive Will Gardiner said: “As we focus on a renewable and flexible portfolio, it is right that we divest these gas generation assets and in doing so create value for our shareholders.”
READ MORE: Amazon strikes Scottish windfarm deal
In a trading update Drax said its performance has remained robust in recent months.
VPI is owned by oil trading giant Vitol. VPI operates a combined heat and power plant in Lincolnshire.
Vitol said the deal agreed with Drax would allow the group to acquire assets at an attractive valuation. The profitability of the combined cycle gas turbine plants is under-pinned by power sales agreements.
VPI manager David Brignall said: “For the foreseeable future, renewables will need to be complemented by highly efficient gas generation.”
Drax has converted units at its flagship Yorkshire plant to run on biomass wood pellets rather than coal. It acquired a pellet production plant near Glasgow with the portfolio bought from ScottishPower.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel