Highlights

  • Drax has secured full operational control and dispatch rights under a 10-year tolling agreement for a 250MW, two-hour duration BESS project.
  • The arrangement requires no upfront capital investment from Drax, with construction and operational responsibilities retained by Fidra Energy.
  • The project is targeting a Commercial Operation Date in 2028, supported by a protected grid connection.

Drax Group (LSE:DRX) has entered into a tolling agreement with West Burton C Limited, a company owned by Fidra Energy, for the development of a 250MW (500MWh) Battery Energy Storage System (BESS) at the West Burton site in England. The agreement marks Drax’s first BESS tolling arrangement and supports the company’s FlexGen strategy through additional short-duration storage capacity without upfront capital expenditure.

Drax Enters First BESS Tolling Agreement

The tolling agreement covers a 250MW battery energy storage project with a two-hour duration at the West Burton site in England. Fidra Energy will be responsible for construction, maintenance and asset availability throughout the contract term. In return, Drax will make fixed annual payments over a 10-year period from the Commercial Operation Date, with payments indexed to UK CPI.

Under the agreement, Drax will hold full operational control and dispatch rights and will retain all revenues generated by the asset, excluding Capacity Market revenues. The structure allows Drax to access additional storage capacity while limiting exposure to construction and availability risks.

Capital-Light Structure Supports FlexGen Strategy

The agreement is positioned as a capital-light opportunity within Drax’s FlexGen portfolio, complementing the group’s investments in the physical ownership of battery storage assets. By combining owned assets with tolling and optimisation arrangements, Drax is building a diversified pipeline of battery storage capacity.

The West Burton project is expected to provide fast-response, short-duration flexibility, supporting system balancing and grid stability. The tolling model also aligns with Drax’s broader approach of disciplined capital allocation across its flexible generation activities.

Alignment With UK Energy Objectives

Battery storage technologies are increasingly central to the UK’s energy system, supporting energy security and the integration of renewable generation. The West Burton BESS project aligns with national objectives around decarbonisation and flexibility by enabling rapid response to changes in electricity demand and supply.

Drax Group Chief Executive Officer Will Gardiner said battery storage plays a role in delivering a secure, affordable and clean energy system for UK consumers. He noted that the agreement contributes to Drax’s ambition to develop a gigawatt-scale pipeline of battery storage opportunities.

Pipeline Development and Conditions

The agreement remains subject to Fidra reaching a final investment decision by Q3 2026. Commercial operations are currently expected between 2028 and H2 2029.

Drax continues to expand its FlexGen platform through a mix of asset ownership and third-party optimisation. In October 2025, the company agreed to acquire three BESS projects from Apatura Limited, totalling 260MW when fully commissioned. In January 2026, Drax completed the acquisition of Flexitricity, adding optimisation capabilities across flexible generation assets.

As of 30 January, Drax Group shares were trading at 898.50 GBX, with the stock up 45.51% over the past year.