(Bloomberg) -- Power generator Drax Group Plc needs the UK government to clarify whether it will continue to subsidize its biomass operations, so that it can proceed with a key expansion project.
“We need to be ready to make some significant investments,” Chief Executive Officer Will Gardiner told Bloomberg. The delayed government decision needs to come by December, he said.
Drax is awaiting a decision by the new Labour government on whether it will support a bridging mechanism that means taxpayers will subsidize its biomass plant beyond 2027, when current agreements expire. That would tide the company over until 2030 and the start of its carbon capture project, which Drax hopes will play a role in Labour’s plan for a decarbonized grid.
In the absence of further subsidies, Gardiner highlighted pumped hydro storage as another business that Drax could focus on. The company is also positioning itself for more activity in the US market.
Drax jumped as much as 16% in London trading, the most in four years, after announcing a £300 million ($386 million) share buyback and an improved profit outlook.
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