Drax Secures 250MW Battery Storage Deal with Fidra Energy

Drax Enters 10-Year Agreement for 250MW Battery Storage

Drax has signed a decade-long tolling agreement with Fidra Energy for a new 250MW/500MWh battery energy storage system. This strategic partnership involves no upfront capital from Drax, which will gain full operational control in exchange for a fixed annual fee indexed to UK CPI.

Details of the Strategic Partnership

Under the terms, Fidra Energy is responsible for the construction, maintenance, and availability of the battery asset throughout the contract period. The agreement is contingent on Fidra making a final investment decision by the third quarter of 2026, with commercial operations targeted for 2028. Drax will retain all revenues generated by the asset, excluding Capacity Market revenues.

Financial and Market Implications

Drax anticipates that the returns from this agreement will be significantly higher than its cost of capital. This capital-light approach allows the company to expand its presence in the UK's growing energy storage market, which is essential for grid stability and the integration of renewable energy sources, without direct construction investment.

Conclusion and Outlook

This agreement enhances Drax's energy trading capabilities and strengthens its portfolio. The project's progression now depends on Fidra's final investment decision, a key milestone for stakeholders to monitor over the next two years.

FAQ

Q: What is the capacity of the battery storage system?

A: The system has a capacity of 250MW and 500MWh.

Q: Does Drax have an upfront capital commitment?

A: No, Drax is not required to provide any upfront capital for the project's construction.

Source: Investing.com