Drax Group (LSE:DRX) has entered into its first tolling agreement covering 250MW (500MWh) of battery energy storage capacity at Fidra Energy’s West Burton C project in England, further scaling up its FlexGen platform. Under the 10-year, capital-light structure, Drax will take full operational control and dispatch rights over the battery asset, while Fidra remains responsible for construction and ongoing maintenance. The group expects the arrangement to deliver returns comfortably above its weighted average cost of capital, strengthening the economics of its growing flexible generation portfolio. The agreement is subject to Fidra reaching a final investment decision by the third quarter of 2026, with commercial operations targeted for the second half of 2029.
The transaction builds on Drax’s recent expansion moves, including the acquisition of Flexitricity and the purchase of three battery storage development projects, and further reinforces its exposure to fast-response, low-carbon power solutions. Strategically, the deal aligns with UK priorities around energy security and decarbonisation while enhancing Drax’s position in the rapidly expanding BESS market. From a broader perspective, the group benefits from strong cash generation, solid profitability, supportive technical signals and an attractive valuation, alongside shareholder-friendly actions such as buybacks and government-backed agreements. These positives are partially offset by ongoing challenges in driving revenue growth and managing market pressures within the pellet segment.
More about Drax Group plc
Drax Group plc is a UK-based energy company focused on flexible power generation and decarbonisation, with an expanding footprint in battery energy storage systems and asset optimisation. Through its FlexGen business, the group is developing a gigawatt-scale pipeline of short-duration, rapid-response storage assets and services designed to support UK energy security and the transition to a lower-carbon electricity system.
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