Drax is in talks with data center firms as investment in carbon capture technology slows down.
As the operator of the UK’s largest biomass power plant, Drax is exploring the possibility of using two of its four energy-generating units to provide power to data centers, in line with the UK Government’s efforts to promote the growth of artificial intelligence (AI).
The recent AI action plan by the UK Government, aimed at enhancing AI infrastructure, could encourage data centers to partner with Drax.
Drax is expected to reveal more details about its ongoing discussions with data centre operators in its forthcoming annual report.
Drax, which operates a wood-burning power station, generates roughly 5% of the UK’s energy. The company has faced criticism from environmental groups, which consider it one of the top carbon polluters in the UK. Drax, however, disputes these claims, asserting that burning wood is carbon-neutral because trees that are cut down and burned can be replanted, which offsets the emissions.
This stance has sparked debates about Drax’s carbon accounting, with some climate experts questioning the accuracy of the company’s claims. Furthermore, concerns about the sustainability of the biomass wood sources Drax uses persist. Last year, Drax was fined £25 million (~$31.5 million) by the energy regulator for submitting inaccurate data.
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Drax recently entered into a bridging agreement with the UK Government, securing subsidies worth nearly £500 million (~$631 million) annually to support its carbon capture project from 2027 to 2031.
However, after Drax reported a record profit of over £1 billion (~$1.2 billion) for 2024, the UK Government announced a reduction of these subsidies by half, citing the company’s “unacceptably large profits” as the rationale for the change.
In response, Drax indicated that it would scale back its investments in carbon capture, expressing hesitation to commit significant resources without clearer regulatory guidance and assurances of a positive return on investment.
Read more: UK Carbon Capture Funding Under Fire: Will It Drive Up Energy Costs?
