Shares of North Yorkshire power generator Drax Group rose as much as 10% after it reported £1.2 billion in 2023 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), beating analyst estimates.
Drax said its full year 2023 dividend will be £89 million, or 23.1p per share, a 10% increase.
The firm said its full year 2024 expectations for adjusted EBITDA are in line with analysts’ consensus estimates of £968 million, with a range of £882 million t0 £1.097 billion.
However, analysts said questions remain over the outcome of consultations with the UK Government on continued biomass subsidies.
On this issue, Drax said: “In January 2024, the UK Government launched a consultation on a bridging mechanism to support large-scale biomass generators transitioning from their existing renewable schemes to BECCS.
“We participated in the consultation and we now await Government’s response.
“We believe that a bridging mechanism offers the most effective way to build a link between the end of the current renewable schemes in 2027 and BECCS operations.
“This could provide multi-year certainty allowing Drax to secure long-term biomass supplies and continue to support energy security via flexible and reliable renewable biomass operations in advance of BECCS.”
Drax Group CEO Will Gardiner said: “Drax performed strongly in 2023 and we remained the single largest provider of renewable power by output in the UK.
“We have created a business which plays an essential role in supporting energy security, providing dispatchable, renewable power for millions of homes and businesses, particularly during periods of peak demand when there is low wind and solar power.
“Policy support for our UK BECCS project continues to progress and we remain in formal discussions with the UK Government to ensure Drax Power Station can play a long-term role in UK energy security, creating thousands of jobs during construction and helping the country reach Net Zero.
“We have made further progress in our ambition to be a world leader in carbon removals and have visibility of high-quality, long-term earnings to 2042 and a strong balance sheet which supports returns to shareholders and investment in growth, both in the UK and internationally.”