By Anthony O. Goriainoff

Drax Group said it would continue operating its biomass power station in Yorkshire, England beyond 2027 after reaching an agreement with the U.K. government.

The U.K. energy company said Monday that the proposed agreement would reduce electricity system costs by around 1.6 billion to 3.1 billion pounds ($1.98 billion-$3.84 billion), when compared to the construction of a new fossil-fuel power station.

The company said the U.K. government concluded that Drax--the country's largest power station-- offered the lowest cost option for bill payers.

Drax said the agreement proposed a mechanism with a price of 113 pounds per MWh, indexed to the U.K.'s consumer price index.

The company said it was targeting average adjusted earnings before interest, taxes, depreciation and taxation between 100 million to 200 million pounds a year during the agreement period.

"The power station plays a critical role in U.K. energy security, providing around 10% of all U.K. renewable energy and over 50% at certain times of peak demand, with enough reliable power for 5 million homes--equivalent to every home in London, or Wales and Scotland combined," the company said.

Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com

(END) Dow Jones Newswires

February 10, 2025 04:19 ET (09:19 GMT)

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