Drax has acquired 2566MW of power generation and storage assets from Scottish Power parent Iberdrola, saying the assets represent a growing system support opportunity. It expects the bulk of income from the plant to come from non-commodity sources.
Scottish Power said “We have become the first integrated energy company in the UK to shift completely from fossil fuel generation to wind power, after completing the sale of our traditional generation business to Drax.”
The acquisition comprises:
- Cruachan pumped storage hydro (440MW),
- Galloway and Lanark run-of-river hydro (126MW),
- Damhead Creek CCGT (805MW),
- Rye House CCGT (715MW),
- Shoreham CCGT (420MW)
- Blackburn Mill CCGT (60MW),
- Daldowie biomass-from-waste facility .
Drax said that recent power and commodity prices suggest the assets, acquitted for £702 million in cash, would result in pre-tax earnings of £90-110 million, from gross profits of £155-175 million, of which around two-thirds is expected to come from non-commodity market sources, including system support services, capacity payments, Daldowie and ROCs. Pumped storage and hydro activities represent a significant proportion of the earnings associated with the portfolio.
The Acquisition is expected to complete on 31 December 2018 and is conditional upon approval from Drax’s shareholders and clearance by UK Competition and Markets Authority