Drax Group to buy Opus Energy
7th December 2016 | Commercial Energy
Drax Group, Britain’s largest coal power producer announced that it wants to buy Opus Energy. It also wants to buy four gas stations in a move away from its coal legacy. This move has been welcomed by investors.
Drax said that it has made a £340m offer for business energy provider Opus Energy. This will create Britain’s fifth biggest business energy retailer in conjunction with Drax’s existing Haven Power customers.
News of Drax’s investments sent its share price up 18%. The Opus deal is subject to the European Commission approving a UK Government contract to convert one of its coal units to running on biomass.
Drax huge power plant in Yorkshire was once Europe’s most polluting coal plant. It has been converting its coal-fired station to biomass. The Government’s decision to cut subsidies for renewable energy has hampered this strategy. This triggered a strategic review last year and the Opus announcement will shift focus to supplying energy to end-consumers. It will also provide bac-up electricity to complement growing wind and solar power output.
Britain faces a supply crunch over the coming winters and nuclear reactors age and coal plants are forced to close by 2025. The Government is trying to encourage new gas plants to be built to help plug the supply gap.
Dorothy Thompson, Chief Executive of Drax, said, “These initiatives mark an important step in delivering our strategy … through diversification of the business.” She also revealed that five of Drax’s largest shareholders support the Opus acquisition.
Drax said that it would pay £18.5m to buy four open cycle gas turbine project from Watt Power. The plants which are not yet built, will bid to supply back-up electricity in 2020-21 in a Government auction which starts next week.
Despite the spectacular increase in share value, Drax said it still expects full year earnings to be at the bottom range of forecasts.
More information available on the website below