Drax Group plc (LSE:DRX) shares gained 0.9% to 870.46 pence during Wednesday’s trading session, extending the previous day’s rally as investors continued to assess the company’s proposed artificial intelligence data centre development with Brookfield Asset Management and Radiant.
The stock had surged more than 8% on Tuesday following the announcement of plans to develop a data centre with capacity exceeding one gigawatt at the Drax Power Station site in northern England.
Brookfield Partnership Creates New Growth Opportunity
The agreement brings together Drax, Brookfield Asset Management and Radiant, Brookfield’s UK-based AI infrastructure platform, to explore the development of large-scale computing facilities.
The first phase of the project is expected to provide up to 100 megawatts of computing capacity, supported by an initial £2.5 billion investment commitment.
Commercial operations are targeted to begin in early 2028, although the project has yet to reach a final investment decision.
The development could establish a new business opportunity for Drax as demand for computing capacity increases alongside investment in artificial intelligence infrastructure.
JPMorgan Sees Potential Upside for Drax Valuation
JPMorgan analysts responded positively to the announcement, suggesting that the partnership could increase the valuation investors attribute to Drax’s data centre ambitions.
The bank also highlighted the potential significance of the development for the longer-term future of Drax Power Station.
The facility’s existing biomass subsidy arrangements are scheduled to expire in March 2031, creating uncertainty over its commercial prospects beyond that date.
JPMorgan indicated that the data centre partnership could improve confidence in the site’s continued operation after the subsidy period ends.
Citi Highlights Remaining Project Uncertainty
Citi took a more cautious position, noting that the proposed development remains at an early stage and that Drax has disclosed limited financial information.
The bank highlighted the absence of a final investment decision, leaving questions over the project’s eventual costs, financing structure and financial returns.
Nevertheless, the announcement continued to attract investor interest, with Drax shares extending their gains into Wednesday’s session.
Broader Market Conditions Support Trading
The FTSE 100 also edged higher on Wednesday as UK government bond yields declined following Democratic gains in the US midterm elections.
Investors assessed whether the election outcome could limit the scope for further deficit-expanding fiscal policies in the United States.
However, market sentiment remained cautious ahead of Thursday’s Bank of England interest rate decision, with expectations of a potential rate increase weighing on interest-rate-sensitive sectors.
Drax’s gains were primarily driven by developments specific to the company, allowing the shares to outperform the broader UK market.
Share Price Performance and Outlook
At 870.46 pence, Drax shares remained below their 52-week high of 937.5 pence but had recovered significantly from their 52-week low of 702 pence.
The proposed Brookfield partnership has introduced an additional potential growth opportunity for the company, although its longer-term financial contribution remains uncertain.
Investors are likely to focus on further announcements concerning project approvals, investment commitments and development timelines as Drax progresses its AI infrastructure plans.
More About Drax
Drax Group plc is a UK energy company with operations focused on electricity generation and biomass energy. Its principal asset is Drax Power Station in North Yorkshire, where the company is exploring opportunities to develop large-scale AI data centre infrastructure alongside its existing energy operations.
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