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Generating giant Drax has reported an increase of 18 per cent in profit before tax, from £102 million in the first half of financial year 2014 to £120 million in H1 2015.
The firm saw a significant increase in biomass generation to 5.2TWh, compared with 3TWh in H1 2014. Total electricity output was 14TWh, compared with 12.9TWh in H1 2014. Retail arm, Haven Power, reported sales of £629 million, compared with £513 million in H1 2014.
Drax said the profit increase “reflects good operations” at the Drax power station, while its growth in sales is “in line with strategic plans and good progress with large contracts”.
However, analysts have said that H2 results are likely to be hit following recent government cuts.
Chief executive Dorothy Thompson said that, while there are elements outside Drax’s control, such as regulatory challenges and weak commodity markets, “the underlying fundamentals of the group remain strong”.
“The UK needs to go green in an affordable way, and is looking to Drax to play a significant role,” she added. “Through our continued transition to sustainable biomass we are Europe’s largest single source of renewable energy, powering the UK’s homes and businesses with reliable, low carbon and affordable electricity.
“Importantly our business sector requires long-term investment and we need a stable policy and regulatory regime to support it. We look forward to continuing our discussions with government to ensure we can deliver what the UK needs in the most effective way.”
Utilities analyst at Whitman Howard, Angelos Anastasiou, said the interim results were “relatively good”, with profits before tax “slightly ahead” of analyst forecasts.
He added that H2 2015 results would be “polarised to the first half” given better contracting in the first half of the year, as well as a planned outage in the second half for the first converted biomass unit and also the removal of the climate change levy exemption for renewables from 1 August 2015.
Despite an announcement last week from government that it would withdraw £500 million of support for biomass, Drax has said it is keen to push ahead with plans for converting its fourth unit to biomass.
In a statement, a Drax spokesperson said it “remains committed to working with government to look at options”, as it looks to secure Contracts for Difference (CfDs) to fund the conversion.
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