(Reuters) -British power generator Drax aims to double its sustainable biomass production capacity by 2030, to capitalise on increasing demand from Europe and Asia as countries transition away from coal.
The company also said on Wednesday it expects 2021 adjusted core profit at the higher end of analyst consensus as it takes steps to control costs in the face of supply chain issues.
Drax, whose power stations provide around 6% of Britain’s electricity, said it was targeting to biomass pellet production of 8 million tonnes per annum (Mtpa) by 2030, compared with current production of 4 Mtpa.
The new target will require over 3 Mt of new biomass pellet production capacity and other carbon capture facilities, with an expected strategic capital investment of about 3 billion pounds ($4 billion) between 2022 and 2030.
Drax is developing technology to capture and store emissions generated from burning wood-based biomass pellets, which are categorized as renewable power, and hopes to have this up and running at a plant in Britain by 2027.
Several energy companies have struggled with soaring wholesale energy prices in Europe’s tight gas market, as regulator Ofgem’s price caps limit how much of the increases can be passed on to customers.
“Group’s strong forward sold position means that it has not been a significant beneficiary of higher power prices from these activities in 2021 but has been able to increase forward hedged prices in 2022 and 2023,” Drax said in a statement.
The company compiled analyst estimate is for core profit for the year ended Dec. 31 between 374 million pounds and 391 million pounds. Drax reported a profit of 412 million pounds a year earlier.
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