Drax Power Station to Host New Data Centre Amid AI and Renewable Energy Push
Published 11 December 2025
Highlights
- Drax plans to convert part of its North Yorkshire power plant into a 100MW data centre by 2027, aiming to support AI growth.
- The project is part of a £2 billion investment in renewable energy, though planning permissions are still pending.
- Drax's trading update indicates strong financial performance, with earnings expected at the top end of market forecasts for 2025.
- The UK government criticized Drax's biomass subsidies, citing insufficient benefits for bill payers and sustainability concerns.
- An ongoing investigation by the Financial Conduct Authority examines Drax's historical transparency regarding wood pellet sourcing.
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Rewritten Article
Drax Power Station to Host New Data Centre Amid AI and Renewable Energy Push
Drax Group has unveiled ambitious plans to transform part of its North Yorkshire power station into a cutting-edge data centre, aiming to bolster the growth of artificial intelligence (AI) technologies. The proposed 100-megawatt facility, slated for completion by 2027, marks a significant step in Drax's £2 billion investment strategy focused on flexible and renewable energy solutions.
Renewable Energy Investment
The data centre will repurpose existing infrastructure at the Selby site, previously used for coal generation, to meet the rising demand for AI capabilities. This initiative aligns with Drax's broader commitment to renewable energy, as the company seeks to maximize the value of its existing portfolio while driving growth in the short, medium, and long term. Although planning permissions have yet to be secured, Drax's strategic move underscores its intent to leverage its assets for technological advancement.
Financial Performance and Government Scrutiny
In its latest trading update, Drax reported robust financial performance, with earnings projected to reach the upper end of market forecasts for 2025. This success is attributed to the company's flexible generation, pellet production, and biomass operations. However, the UK government has raised concerns over the subsidies Drax receives for biomass energy, arguing that they do not deliver adequate value for bill payers. The government has also mandated that Drax increase its use of sustainable woody biomass to 100% by 2026, up from the current 70%.
Sustainability and Transparency Challenges
Drax's sustainability practices have come under scrutiny following reports that it sourced wood from ecologically sensitive forests in Canada. The Financial Conduct Authority is investigating Drax's historical disclosures about wood pellet sourcing to ensure compliance with transparency regulations. Despite these challenges, Drax maintains that it sources biomass from well-managed, sustainable forests and not from designated old-growth areas.
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Scenario Analysis
Looking ahead, Drax's data centre project could significantly enhance its role in the UK's renewable energy landscape, particularly as AI technologies continue to evolve. However, the company's reliance on biomass and the associated government scrutiny may pose challenges to its sustainability claims and financial strategies. The ongoing investigation by the Financial Conduct Authority could lead to increased regulatory oversight, potentially impacting Drax's operations and market position. As the energy sector shifts towards more sustainable practices, Drax's ability to adapt and address these concerns will be crucial in maintaining its competitive edge.
Drax Group has unveiled ambitious plans to transform part of its North Yorkshire power station into a cutting-edge data centre, aiming to bolster the growth of artificial intelligence (AI) technologies. The proposed 100-megawatt facility, slated for completion by 2027, marks a significant step in Drax's £2 billion investment strategy focused on flexible and renewable energy solutions.
Renewable Energy Investment
The data centre will repurpose existing infrastructure at the Selby site, previously used for coal generation, to meet the rising demand for AI capabilities. This initiative aligns with Drax's broader commitment to renewable energy, as the company seeks to maximize the value of its existing portfolio while driving growth in the short, medium, and long term. Although planning permissions have yet to be secured, Drax's strategic move underscores its intent to leverage its assets for technological advancement.
Financial Performance and Government Scrutiny
In its latest trading update, Drax reported robust financial performance, with earnings projected to reach the upper end of market forecasts for 2025. This success is attributed to the company's flexible generation, pellet production, and biomass operations. However, the UK government has raised concerns over the subsidies Drax receives for biomass energy, arguing that they do not deliver adequate value for bill payers. The government has also mandated that Drax increase its use of sustainable woody biomass to 100% by 2026, up from the current 70%.
Sustainability and Transparency Challenges
Drax's sustainability practices have come under scrutiny following reports that it sourced wood from ecologically sensitive forests in Canada. The Financial Conduct Authority is investigating Drax's historical disclosures about wood pellet sourcing to ensure compliance with transparency regulations. Despite these challenges, Drax maintains that it sources biomass from well-managed, sustainable forests and not from designated old-growth areas.
What this might mean
Looking ahead, Drax's data centre project could significantly enhance its role in the UK's renewable energy landscape, particularly as AI technologies continue to evolve. However, the company's reliance on biomass and the associated government scrutiny may pose challenges to its sustainability claims and financial strategies. The ongoing investigation by the Financial Conduct Authority could lead to increased regulatory oversight, potentially impacting Drax's operations and market position. As the energy sector shifts towards more sustainable practices, Drax's ability to adapt and address these concerns will be crucial in maintaining its competitive edge.
