Key Highlights

  • Drax Group (LSE:DRX) shares surged more than 8% to around 878p on 3 November 2026, making it one of the top risers on the FTSE 250.
  • Drax signed a strategic Partnership with Brookfield and its UK AI infrastructure platform Radiant to develop a data centre at Drax Power Station in North Yorkshire.
  • The project targets up to 100MW from early 2028, a further 500MW between 2028 and 2031, and ultimately more than 1GW of capacity.
  • Total investment, including semiconductors, could exceed £20 billion, with around £2.5 billion earmarked for phase one.
  • A Capital Markets Day on 23 November 2026 is the next major catalyst for the stock.

Why Drax Group (LSE:DRX) Is in Focus Today

Drax Group (LSE:DRX) became one of the most talked-about stocks on the London market on 3 November 2026 after announcing a landmark partnership to bring large-scale artificial intelligence infrastructure to its North Yorkshire power station. Shares in the FTSE 250 energy company jumped more than 8% in early trading to around 878p, as investors reacted to a deal that could transform how the market values the group's land, grid connections and generation assets.

Under the agreement, Drax will work with global asset manager Brookfield and Radiant, Brookfield's UK-based AI infrastructure and neocloud platform, to jointly develop a data centre on the Drax Power Station estate. Radiant will be responsible for designing, building and operating the facility, while Brookfield brings Investment capital and Drax contributes its site, power infrastructure and expertise in energy supply.

The news resonated well beyond the UK. With Europe racing to build the infrastructure needed for AI amid high energy and land costs, the scale of the proposal made it one of the most widely shared energy stories of the day across investment communities and Social Media platforms.

Inside the AI Data Centre Plan

The project is designed to be phased. The initial target is up to 100 megawatts of capacity operational from the first quarter of 2028. An additional 500MW is expected to be brought online between 2028 and 2031, with the long-term ambition of securing more than 1 gigawatt of capacity at the site.

Brookfield estimates that total investment, including semiconductors, could exceed £20 billion, with an initial £2.5 billion investment planned for the first phase. A planning application for phase one is being prepared and public consultation is expected to begin in November.

The first phase remains subject to planning, regulatory and network approvals from government and relevant agencies, as well as securing a tenant for the facility.

Why Drax's Site Is So Valuable

The key attraction for data centre developers is power. Drax Power Station has 4GW of grid access and 2.6GW of active dispatchable generation capacity. Access to large-scale, reliable electricity and existing grid connections is one of the biggest bottlenecks for AI data centres, which can take years to secure in many parts of Europe.

For Drax Group (LSE:DRX), the partnership offers a way to monetise its land, generation capacity and grid connections in a new market. It also diversifies the group's Earnings at a time when investors have debated the long-term future of biomass generation and the Subsidy framework that supports it. Drax had previously flagged that it could start work on a data centre by 2027, so today's announcement represents a major step in turning that ambition into reality.

Recent Trading and Upgraded Outlook

The data centre deal comes on top of improving operational momentum. In September 2026, Drax upgraded its outlook for 2026 adjusted EBITDA, citing strong operational performance as its generation Assets helped balance the system during the summer heatwave. In the first half of 2026, the group generated around £279 million of adjusted EBITDA.

Drax has also completed its Acquisition of Bluefield Solar Income Fund, a deal valued at around £561 million. The acquisition broadens the group beyond biomass and flexible generation, bringing total capacity under management to around 6.1GW and adding a 2.9GW gross development pipeline of battery storage and solar.

As a result of the acquisition, Drax expects net Debt to adjusted EBITDA to sit above its long-term target of 2 times in 2026 before returning towards that level by the end of 2027. The group paid an Interim Dividend of 12.9p per share in October 2026.

Analyst and Market Sentiment

Before today's rally, analyst views on Drax Group (LSE:DRX) were mixed, with some Brokers holding neutral ratings and price targets around the 800p level. The data centre partnership adds a new layer to the investment case that could prompt fresh reassessments.

Risks to Consider

Investors should be aware of several risks. The data centre project depends on planning approval, grid and regulatory consents, and securing a tenant. Policy risk around biomass subsidies, carbon accounting and the sustainability of wood pellet Supply chains remains a recurring theme. UK power prices also influence profitability, as seen when weaker prices weighed on profits earlier in 2026.

What Investors Are Watching Next

The next major event is the Capital Markets Day on 23 November 2026, where Drax is expected to set out its growth plans through the end of the decade. Investors will look for detail on the Economics of the data centre partnership, including how Drax will be paid for power, land and services, as well as capital allocation, Leverage and dividend policy.

Progress on the planning application and public consultation, any tenant announcements, and updates on the integration of the Bluefield solar portfolio will also be closely watched. The longer-term framework for biomass generation after the current support arrangements will remain a key valuation driver.