Proactive Investors - Drax Group (LON:DRX) has completed a refinancing plan as the power generator awaits news from the government on plans to retrofit its biomass plant with carbon capture technology.
New facilities to raise over £700 million were taken out over the first three months of the year to repay bonds maturing next year, Drax said in a statement.
However, news on the FTSE 250-listed firm’s bioenergy with carbon capture and storage (BECCS) plan was thin, with Drax saying an update on government support was expected “shortly”.
Drax gained approval to retrofit the plant, which burns wood chips, earlier this year, but is yet to hear whether the government will partially fund the plan, estimated to cost £2 billion.
“With a bridging mechanism and the right support from government, our BECCS plans could help the UK meet its net zero targets,” Drax boss Will Gardiner said.
Drax has faced scrutiny over the plans though, not least after a BBC investigation found some wood sourced to fuel its plant had come from “precious” forests across the Atlantic.
The company already receives government support for its biomass power generation, with Drax saying forward contracted sales, from the likes of contracts for difference, equated to £2.9 billion as of April.
Drax added it had also continued to preemptively participate in the carbon dioxide removal market, with the firm planning to build BECCS sites in the US too.
On public support in the UK, Liberum noted: “We continue to estimate that this will be clarified this year, and we expect the company’s valuation to reflect the removal of this uncertainty.”
Drax said expectations for full-year pre-tax earnings remained in line with market consensus of £956 million.
Shares climbed 1.2%.