NORTH Yorkshire power giant Drax has seen its earnings drop 17 per cent to £140million, but the amount of renewable electricity it is generating has soared, latest figures show.

Bosses at Drax Group, which operates the power station near Selby, said strong operational performances in 2016 helped the business to respond to the financial challenge posed by "difficult commodity markets."

Reporting the annual results, for the year ending December 31, 2016, Drax saw EBITDA (earnings before interest, tax, depreciation and amortisation) fall from £169million in 2015 to £140million in 2016.

In 2016, 65 per cent of Drax's electricity was generated from from renewable biomass, up from 43 per cent in 2015.

Meanwhile, it produced 16 per cent of the UK's renewable electricity.

Drax Group chairman Philip Cox believes 2016 was a "pivotal" year for the business, marking the completion of the biomass transformation project which started in 2012, and the announcement of a new strategy.

He said: "Against a background of low wholesale electricity prices, and a volatile and demanding environment for renewable energy providers, the Group has again delivered strong operational performance.

"Following a comprehensive review, initiated in 2015, the Group's new strategy has been defined and is based on creating a more diversified earnings base that will produce higher quality returns in the long term. Central to this strategy, Drax aims to play an increasing role in delivering a robust low carbon energy system for the UK."

According to Mr Cox, evidence of delivering the new strategy can already be seen in Drax's acquisition of business-to-business energy supplier Opus Energy and four projects to construct fast response Open Cycle Gas Turbine generation plants.

Dorothy Thompson, chief executive of Drax Group, said: "We are playing a vital role in helping change the way energy is generated, supplied and used as the UK moves to a low carbon future.

"With the right conditions, we can do even more, converting further units to run on compressed wood pellets. This is the fastest and most reliable way to support the UK's decarbonisation targets, whilst minimising the cost to households and businesses."

Andy Koss, chief executive of Drax Power, added: "We are pleased with the results which are in keeping with guidance given it was a challenging year. The key really is the completed biomass transformation. We've now got three out of six generating units running on wood pellets."

Drax's pre-tax profits rocketed from £59million in 2015 to £197million in 2016.

Will Gardiner, chief financial officer of Drax Group, explained: "The year-on-year change predominantly reflects one-off asset obsolescence charges of £109 million in 2015 and the £53million increase in unrealised gains due to the increased value of our foreign currency purchase contracts."