Drax to fall short on forecasts

Drax to fall short on forecasts

Drax to fall short on forecasts

Updated in Business news

NORTH Yorkshire power station owner Drax has said it expects dropping power prices to lead to full year results falling short of current forecasts.

The Selby business revealed in its interim management statement, for the period from January 1, 2014 to date, that it has been hit by weaker gas markets due to mild weather across Europe.

The group said it also expects some further weakness in prices of the government scheme designed to encourage renewable power generation, exacerbated by abnormally high wind generation.

As a result, Drax anticipates that, unless markets improve in the coming months, full year EBITDA and underlying earnings per share for 2014 will be below current market forecasts.

The group said it has continued to make “very good” progress with its on-going transformation to a predominantly biomass-fuelled electricity generator and that commissioning of its new on-site biomass facilities was on schedule to complete in the third quarter of this year.

Two of the four storage domes are now in service and the new facility at Port of Hull is fully operational.

Last month, Drax announced it had launched a legal challenge against the Government after it changed its mind over funding for the conversion of one of Drax's generating units from coal to sustainable biomass.

In its interim statement Drax said: “We do, however, remain fully committed to our strategy of transforming Drax into a predominantly biomass-fuelled generator, initially through the conversion of three of our six generating units, with a fourth unit conversion under evaluation.”

The North Yorkshire group also said that it has agreed a new private placement for £100 million with various funds managed by M&G Investments, which will be used for general business purposes.

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