North Yorkshire power generator Drax announced it expects to propose a dividend for the 2022 financial year of £84 million, an 11.7% increase on 2021, as its first-half profit before tax soared to £200 million from £52 million.

Interim dividend will be 8.4p per share, up from 7.5p, with expected full year dividend up 11.7% to 21p.

Reporting half-year results to June 30, 2022, Drax said: “Adjusted EBITDA of £225 million represents a 21% increase compared to H1 2021 (£186 million).

“This strong performance reflects increased pellet sales, a strong generation performance across the portfolio and improved profitability in our customers business.

“Whilst we have seen some limited inflationary pressures in our cost base, most notably in respect of utilities and bunker fuel, the integrated nature of our biomass supply chain and operations, combined with long-term contracts in place for fibre, pellet procurement and freight continue to provide a good level of protection from any cost increases.

“Further, with indexation of UK renewable schemes and third-party sales contracts, inflationary pressure in our cost base is largely offset by increased revenues.”

Drax said its balance sheet is strong with total cash and committed facilities of £539 million as at June 30, 2022, with net debt at £1.101 billion.

“We expect to propose a dividend for the 2022 financial year of £84 million, an 11.7% increase on 2021, consistent with our policy to pay a dividend which is sustainable and expected to grow,” said Drax.

“As has been our practice since we implemented the policy in 2017, 40% of the expected full year dividend will be paid for the first six months of 2022, £34 million or 8.4 pence per share.”

Drax CEO Will Gardiner said: “As the UK’s largest generator of renewable power by output, Drax plays a critical role in supporting the country’s security of supply.

“We are accelerating our investment in renewable generation, having recently submitted planning applications for the development of BECCS at Drax Power Station and for the expansion of Cruachan Pumped Storage Power Station.

“As a leading producer of sustainable wood pellets we continue to invest in expanding our pellet production in order to supply the rising global demand for renewable power generated from biomass.

“We have commissioned new biomass pellet production plants in the US South and expect to take a final investment decision on up to 500,000 tonnes of additional capacity before the end of the year.

“As carbon removals become an increasingly urgent part of the global route to Net Zero, we are also making very encouraging progress towards delivering BECCS in North America and progressing with site selection, government engagement and technology development.

“In the UK and US we have plans to invest £3 billion in renewables that would create thousands of green jobs in communities that need them, underlining our position as a growing, international business at the heart of the green energy transition.”