The boss of the company that owns Scotland's famous "Hollow Mountain" hydro power station has said thousands of new jobs could be in pipeline if investment conditions are right for green energy projects.

Chief executive Will Gardiner's comments came as energy company Drax said annual earnings are on course to hit the top end of guidance for £993 million to £1.04 billion. The trading update also confirmed plans for Drax to buy back up to £300m of its shares during the next two years, sending its stock sharply higher in yesterday's trading.

Yorkshire-based Drax, which operates the UK's largest biomass plant at Selby, has said it will invest £80m in a major refurbishment of the Cruachan station in Argyll which has been producing hydro power since the 1960s. Drax acquired the site from ScottishPower in 2019 as part of a £702m deal for a portfolio of power generation assets.

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Drax said initial design and engineering work has now been completed on the option for a 600MW expansion of Cruachan. A final investment decision will be made next year, with operation from 2030.

"Subject to the right investment framework and milestones, Drax will develop its options for [bioenergy carbon capture and storage] and pumped storage hydro which could create thousands of new jobs and private investment into green energy projects in both Yorkshire and Scotland," Mr Gardiner said.

"We believe that biomass has a growing role to play in the energy transition, such as in the production of [sustainable aviation fuels]. We have also launched our new Elimini carbon removals business which aims to develop projects providing 24/7 power and carbon removals outside the UK, offering long-term investment opportunities in what we believe could be a major new global market."

Drax said the intermittency of renewables had driven demand for power from its wood-burning power station at Selby. The company expects continued annual earnings of £250m from its flexible generation and wood pellet production operations.

As of November 8, Drax had more than £3.2bn or 27.5TWh of contracted forward power sales between 2024 and 2026 on its biomass, pumped storage and hydro generation assets. 

“We continue to deliver a strong operational performance, supporting the UK energy system with dispatchable, renewable power, keeping the lights on for millions of homes and businesses, while supporting thousands of jobs throughout our supply chain," Mr Gardiner added.

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“Our flexible generation and pellet production businesses are making good progress towards our target to deliver post 2027 recurring EBITDA over £500m and we are continuing to develop options for growth, while remaining disciplined on capital allocation."

Drax operates a number of hydro generation facilities in Scotland including the Cruchan plant at Loch Awe, a scheme in Lanarkshire, and assets in Galloway.

Commissioned in 1926, the Lanark run-of-river scheme is made up of two hydropower stations in Bonnington and Stonebyres with a total capacity of 17 megawatts. Opened in 1935, Galloway is made up of six stations and eight dams with a total capacity of 109 megawatts.

There is also a fuel facility at Daldowie on the outskirts of Glasgow that processes sludge from hundreds of wastewater treatment plants in the west of Scotland, turning them into pellets known as “waste derived fuel”.

The company will report its full year results on February 27. Shares in Drax closed yesterday's trading 24.5p higher at 666.5p, an increase of 3.8%.