Drax Pays $922 Million For Iberdrola's U.K. Clean Power Assets

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Drax Group plc (LSE:DRX) (Selby, England), operator of the U.K.'s largest operational coal-fired power plant, is betting big on cleaner energy by announcing that it is buying ScottishPower Limited's (Glasgow, Scotland) portfolio of pumped storage, hydro and gas-fired generation for £702 million ($922 million).

The cash deal has been agreed with ScottishPower's parent company, Iberdrola S.A. (BMAD:IBE) (Bilbao, Spain), and drives the continued shift by Drax away from coal-fired power. The low-carbon and renewable U.K. power generation assets have a combined generating capacity 2,566 megawatts (MW). The portfolio consists of Cruachan pumped-storage hydro (440 MW), run-of-river hydro locations at Galloway and Lanark (126 MW), four combined-cycle gas turbine (CCGT) stations: Damhead Creek (805 MW), Rye House (715 MW), Shoreham (420 MW) and Blackburn Mill (60 MW), and a biomass-from-waste facility at Daldowie.

Will Gardiner, chief executive officer of Drax Group, said: "It's a critical time in the U.K. power sector. As the system transitions towards renewable technologies, the demand for flexible, secure energy sources is set to grow. We believe there is a compelling logic in our move to add further flexible sources of power to our offering, accelerating our strategic vision to deliver a lower-carbon, lower-cost energy future for the U.K."

For ScottishPower, the deal means that it is the first integrated energy company in the U.K. to shift completely from coal and gas generation to wind power, after completing the sale.

"This is a pivotal shift for ScottishPower as we realise a long-term ambition," explained Keith Anderson, chief executive of ScottishPower. "We are leaving carbon generation behind for a renewable future powered by cheaper green energy. We have closed coal, sold gas and built enough wind to power 1.2 million homes. In the last decade, ScottishPower has closed all of its coal plants, and with the sale of the remaining gas and hydro stations, the company now generates 100% of its electricity from wind power. Currently ScottishPower has 2,700 MW of wind power capacity operating or under construction in the U.K., and a pipeline of future projects capable of generating more than 3,000 MW."

Industrial Info has been tracking the ongoing conversion of Drax's giant coal-fired plant in Selby, North Yorkshire, to biomass. Four units at the six-unit plant have now been converted, meaning two-thirds of the power station's capacity produces renewable power. It is classed as Europe's largest decarbonisation project. Drax has spent £730 million ($959 million) to date on the conversion project. Industrial Info is tracking projects that will replace the last two coal-fired unit with two gas-fired plants with a combined generating capacity of more than 3,600 MW. For additional information, see June 20, 2018, article - Drax Converting Fourth Coal-Fired Unit to Biomass.

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