Drax Reaffirms 2026 Outlook, Sets Higher 2029 EBITDA Target on Battery Storage Growth

Drax PLC reaffirmed its full-year 2026 earnings forecast despite reporting a 39% drop in first-half adjusted EBITDA. The UK-based power generator also introduced a higher medium-term earnings target for 2029, incorporating its growing battery storage operations for the first time.

First-Half Performance

The company reported first-half 2026 adjusted EBITDA of £279 million, a 39% decrease from the prior-year period and 4% below the analyst consensus of £289 million. According to the report, the shortfall was primarily driven by its Biomass Generation division, which delivered EBITDA 10% below forecasts.

In contrast, the Pellet Production division met expectations, producing 1.9 million tonnes during the six-month period. Drax ended the first half with a net debt to EBITDA ratio of 1.3 times and reported £630 million in available liquidity from cash and committed facilities.

Updated Financial Outlook

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Despite the first-half miss, Drax confirmed it expects full-year 2026 adjusted EBITDA to align with the current market consensus average of £665 million, which falls within a range of £643 million to £681 million.

Looking further ahead, the company established a new medium-term adjusted EBITDA target for 2029, setting a range of £650 million to £800 million. This updated guidance is an increase from the previous range of £600 million to £700 million and now includes expected contributions from its Battery Energy Storage Systems (BESS) division. The company noted this guidance excludes any potential impact from the BSIF acquisition.

Market Context

The new 2029 target implies an expected EBITDA contribution of £50 million to £100 million from the BESS operations. The company's new guidance sits above the current analyst consensus for 2029, which stands at £627 million on a like-for-like basis, with analysts projecting BESS EBITDA at approximately £50 million, the lower end of Drax's new implied range.