Summary

Drax Group plc (LSE:DRX) is a FTSE 250 and FTSE 350 UK power generator and flexible energy provider. The stock is in focus after FY2025 results showed record renewable generation of 15.0 TWh, adjusted EBITDA of £947m, an 11.5% Dividend rise to 29p per share and a £450m buyback extension. This article explains the share price drivers, results and risks for UK investors.

Key takeaways

  • Drax Group is a FTSE 250 and FTSE 350 constituent and one of the UK’s largest power generators.
  • FY2025: record renewable generation of 15.0 TWh; Adjusted EBITDA of £947m (-11% YoY), reflecting lower achieved power prices vs 2024.
  • In November 2025, Drax signed a CfD agreement with the UK Government for c.6 TWh of biomass generation per year between April 2027 and March 2031 at a Strike Price of £109.90/MWh (2012 real).
  • Dividend raised 11.5% to 29.0p per share — a nine-year growth streak; over £1bn to be returned to shareholders via dividends and Buybacks.
  • Net Debt fell to £784m (0.8x Adjusted EBITDA); £300m buyback completed and £450m extension announced.

Introduction: Why Drax Group shares are in focus on the FTSE 350

Drax Group plc (LSE:DRX) is one of the UK’s most distinctive power and energy stocks and a constituent of the FTSE 250 and the wider FTSE 350. The group owns and operates the Drax Power Station in North Yorkshire, the UK’s largest single source of renewable electricity, alongside a portfolio of flexible energy and energy Supply businesses. For UK investors monitoring FTSE 350 share price news, Drax is one of the most closely watched UK power and energy transition stocks on the London Stock Exchange.

The Drax share price has been in focus following FY2025 results that showed record renewable generation of 15.0 TWh, adjusted EBITDA of £947m, an 11.5% rise in the dividend to 29.0p per share and the announcement of a £450m share buyback extension. The November 2025 contract-for-difference (CfD) agreement with the UK Government for around 6 TWh of biomass generation per year from April 2027 to March 2031 was also a major strategic milestone. For FTSE 350 investors, Drax combines a high-yielding, Capital-returning income story with strategic optionality around biomass, batteries, flexible generation and potential data centre opportunities.

Company overview: A diversified UK power and energy group

Drax Group’s portfolio includes the Drax Power Station, which has been converted from coal to sustainable biomass, alongside hydroelectric and pumped storage Assets in Scotland, a network of energy supply businesses for SMEs and corporates, and a growing flexible generation and battery energy storage (BESS) platform. Drax is also developing carbon capture and storage (CCS) and exploring new opportunities such as large-scale data centres.

Drax trades on the Main Market of the London Stock Exchange under the ticker DRX and is a constituent of the FTSE 250 and FTSE 350. For UK investors, Drax represents a unique combination of regulated/contracted renewable power, flexible generation and strategic transformation around the UK energy transition.

What happened: Record renewable generation, CfD and capital returns

The most material recent event for Drax was the publication of its FY2025 full-year results. According to publicly available figures, Drax produced more renewable power than ever before, with record renewable generation hitting 15.0 TWh. Adjusted EBITDA fell 11% year on year to £947m, mainly due to lower achieved power prices versus 2024.

In November 2025, Drax signed a CfD agreement with the UK Government to provide around 6 TWh of biomass generation per year between April 2027 and March 2031, with a strike price of £109.90/MWh (2012 real). This agreement provides multi-year Revenue visibility for the biomass Business, which remained the largest contributor at £725m in adjusted EBITDA. The CfD is a major derisking step for the company’s core asset.

On capital returns, the Board raised the dividend by 11.5% to 29.0p per share, continuing a nine-year growth streak (with the Dividend per share growing on average by 11% per annum since 2017). Over £1bn is to be returned to shareholders via dividends and share buybacks. Drax completed a £300m share buyback programme and announced a £450m extension. Net debt fell to £784m, just 0.8x adjusted EBITDA, signalling a strong Balance Sheet.

Strategically, Drax continues to transform from a biomass-focused generator to a diversified flexible generation platform, including battery optimisation, tolling arrangements and potential data centre development. The group is exploring a 1.2 GW-scale data centre opportunity, with an initial 100 MW phase targeted from 2027.

Why it matters for UK investors

Drax matters for UK investors as one of the most distinctive FTSE 250 power stocks and a strategically important asset within the UK’s electricity system. As a FTSE 350 constituent, it is held in many mid-cap and income-focused UK strategies. The combination of contracted biomass revenue, flexible generation, energy supply and emerging data centre opportunities makes Drax one of the more complex but interesting UK energy Investment cases.

The Drax share price serves as a barometer for sentiment on UK biomass, energy transition policy, power prices and flexible generation Economics.

Latest verified update

The most material verified updates for Drax include the FY2025 record renewable generation, the £947m adjusted EBITDA, the November 2025 CfD agreement for biomass, the 11.5% dividend increase to 29.0p, the £300m buyback completion and £450m extension, and the data centre exploration. According to publicly available data, the Drax share price was 818.50p on 19 May 2026, with a 52-week high of 937.5p. The FTSE 350 constituent table PDF snapshot also showed a price of 818.50p, consistent with this range. UK investors should consult Drax’s Investor relations website and RNS announcements for the most current verified facts.

Share price and investor sentiment

The Drax share price has reflected the combination of strong capital returns, the CfD derisking story, biomass revenue visibility and broader sentiment on UK energy stocks. Sentiment in 2025 and 2026 has been broadly constructive, supported by the CfD and the £1bn Shareholder return programme. Sceptics highlight the long-term debate over the sustainability and policy support for biomass, exposure to power prices for non-contracted output, and execution risk on data centres and BESS.

Sector and macro context: UK power, biomass and the energy transition

Drax operates in the UK power sector, where the transition from fossil fuels to renewables remains the dominant long-term theme. Biomass has played a controversial but important role in providing dispatchable renewable power. The CfD agreement provides revenue visibility through to March 2031 and supports continued investment.

Macroeconomic Factors are also relevant. UK and European power prices, gas prices, interest rates and regulatory frameworks all affect the value of Drax’s assets. The shift to net zero, the role of flexible generation and the growth of data centre Demand in the UK are also key contextual factors.

Earnings, dividends and balance sheet

According to FY2025 results, adjusted EBITDA of £947m, an 11.5% dividend rise to 29.0p, completion of a £300m buyback and a £450m extension all demonstrate strong cash generation and shareholder returns. Net debt of £784m at 0.8x adjusted EBITDA supports a comfortable balance sheet, providing flexibility for further investment and capital returns.

Broker, analyst and investor sentiment

Drax is widely covered by UK and European Sell-Side analysts focused on power and utilities. Sentiment in 2025 and 2026 has been broadly positive on the CfD, the capital returns and the Diversification strategy, although the long-term sustainability and policy debate around biomass remains a recurring theme.

For specific broker views, investors should consult their own Brokers or platforms such as Reuters, Bloomberg, the Financial Times, MarketWatch and Yahoo Finance UK.

Growth catalysts

Several catalysts could support Drax’s investment case. The first is the CfD agreement, providing multi-year revenue visibility for biomass. The second is continued expansion in flexible generation, including BESS, hydro, pumped storage and tolling arrangements. The third is the data centre opportunity, with potential to monetise existing land, grid connection and power offtake.

Continued capital returns via dividends and buybacks may further support per-share metrics.

Risks and uncertainties

Risks include long-term policy debate around biomass sustainability, power price Volatility for non-contracted output, execution risk on new initiatives such as BESS and data centres, regulatory and political risk, and the Cost of Capital for capital-intensive energy projects.

What investors should watch next

UK investors monitoring the Drax share price and FTSE 350 news may want to track half-year and full-year results, dividend declarations, buyback execution, CfD implementation milestones, BESS and flexible generation updates, and data centre developments. Macro data on UK power prices, interest rates and energy policy will also influence sentiment.

Conclusion

Drax Group is a distinctive FTSE 250 and FTSE 350 power stock that combines record renewable generation, a multi-year biomass CfD, a strong balance sheet and a major capital return programme of more than £1bn. Risks remain around biomass policy, power prices and execution on new initiatives, but the long-term strategic position is compelling. For UK investors watching FTSE 350 share price news and UK power stocks, Drax Group is one of the most strategically interesting names on the London Stock Exchange.