Drax completes purchase of Scottish Power gas portfolio

Drax has completed its acquisition of a 2.6GW portfolio of gas, hydro and pumped storage assets operated by Scottish Power from its parent company Iberdrola.

The £702 million deal has added nearly two-thirds to Drax’s total generation capacity.

“As a British energy company, we are very proud to be the new owners of these critically important power stations across England and Scotland,” said Drax group chief executive Will Gardiner.

“For decades Drax has been at the heart of our energy system and now we’re going to play a bigger role than ever.

“We are investing in Great Britain by acquiring this portfolio of flexible, low-carbon and renewable generation assets.

“They complement our existing activities by providing very flexible power which not only keeps the lights on for thousands of households, but also provides crucial system support services to the grid, maintaining secure supplies and enabling more renewables like wind and solar onto the system”.

On 3 December, Iberdrola and Drax announced revised terms for the transaction following the suspension of the capacity market due to an EU court ruling. The acquisition was approved by Drax shareholders on 21 December and formally completed on 31 December.

Among the assets bought by the company are four combined-cycle gas turbine plants with a total capacity of 2GW and the 440MW Cruachan pumped storage facility in Scotland.

Biofuelwatch has raised concerns that the purchase will halt plans developed by Scottish Power to double the capacity of Cruachan at a cost of up to £400 million.

The environmental campaign group believes Drax is highly unlikely to invest in the expansion due to its significant interests in fossil fuel and biomass generation and the net losses it posted in 2017 and the first half of 2018.

Announcing the deal in October, Scottish Power chief executive Keith Anderson said it marked a “pivotal shift” for the company, which was “leaving carbon generation behind for a renewable future powered by cheaper green energy”.

However, Almuth Ernsting from Biofuelwatch described it as a “cynical, profit-driven move” that would undermine the growth of renewables.

“If Scottish Power had wanted to help address climate change, it would have shut down, not sold its gas power stations and invested in more pumped hydro storage,” he added.

Scottish Power has not yet responded to a request for comment.

A spokesperson for Drax said: “There are a number of attractive opportunities available to us as the new owners of this portfolio of assets.

“In 2016 a feasibility study showed that between 400 and 600 MW of additional capacity could be developed at Cruachan, subject to the appropriate level of support and this is one of the options we’re going to be exploring.

“Pumped storage has an important role to play in delivering flexible, reliable power to support the grid as it decarbonises and becomes increasingly dependent on intermittent wind and solar.”