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Drax has agreed to sell its fleet of four combined-cycle gas turbines to VPI for £193.3 million.
The company said the plants have performed well since being acquired from Scottish Power at the end of 2018 but “do not form part of the group’s core flexible and renewable generation strategy.”
Drax said it expects to earn a premium on the sale of the assets and will use the proceeds to develop its pellet supply chain and accelerate its efforts to fit carbon capture and storage to the biomass units. It will retain the hydro plants it also acquired from Scottish Power alongside the gas turbines.
Group chief executive Will Gardiner said: “By focusing on our flexible and renewable generation activities in the UK we expect to deliver a further reduction in the group’s CO2 emissions, which should accelerate our ambition to become not just carbon neutral but carbon negative by 2030.
“By using carbon capture and storage with biomass at the power station in North Yorkshire to underpin the decarbonisation of the wider Humber region, we believe we would be creating and supporting around 50,000 new jobs and delivering a green economic recovery in the North.
“We greatly value the contribution that our colleagues in gas generation have made to the group over the last two years. As we focus on a renewable and flexible portfolio, it is right that we divest these gas generation assets and in doing so create value for our shareholders.”
The four CCGTs are:
- Damhead Creek in Kent (812MW)
- Rye House in Hertfordshire (715MW)
- Shoreham in West Sussex (420MW)
- Blackburn Mill in Lancashire (60MW)
The sites are being acquired by VPI, which operates a combined heat and power plant at Immingham in in North Lincolnshire and is owned by the Dutch energy company Vitol. The sale price of £193.3 million includes £29 million that is tied to an option to develop a new CCGT at Damhead Creek.
Subject to regulatory approval, the transaction is expected to be completed by the end of January 2021.
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