Drax agrees to buy renewable energy firm in next stage of diversifying operations
Shares in energy giant Drax rocketed nearly 20 per cent this morning after it announced a £340m deal to buy Britain's sixth largest energy provider.
Opus Energy generates 96 per cent of its energy from renewable sources and its purchase by Drax fits neatly into plans announced earlier this year to improve earnings through diversifying across energy markets.
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Chief executive Dorothy Thompson said the purchase marked an "important step in delivering… more predictable long-term financial performance through greater diversification of the businesses".
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The Opus transaction will not come as a huge surprise to some of Drax's main investors. Thompson revealed the firm have gathered support of certain institutional investors representing 45 per cent of share capital prior to finalising terms.
Drax also splashed out a further £18.5m for four open cycle gas turbine development projects.
Thompson said the purchases would "play an important role in helping government meet their ambition of new gas generation, reducing carbon emissions, forcing more coal off the system, providing additional system support to ‘plug the gaps’ created by intermittent renewables and boosting security of supply".
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The FTSE 250 group is in the process of transitioning from coal-fired power stations to renewable sources – in line with government plans to phase out the UK's dependency on coal for power by 2025.
Thompson added:
With the right conditions, we can do even more, converting further units at Drax to use sustainable biomass in place of coal. This is the fastest and most reliable way to support the UK’s decarbonisation targets, whilst minimising the cost to households and businesses.