Drax Group plc (DRX) reports strong sales and performance in its wood pellet production business through the year-to-date in 2024. Building on increased production and improved margins over the first half of 2024, the Group’s wood pellet division targets achieving recurring EBITDA over £250 million annually post-2027. This goal reflects Drax’s strategic expansion into both own-use and third-party pellet sales, particularly in the Sustainable Aviation Fuel (SAF) sector, with projected sales growth across North America, Asia, and Europe.
Drax is actively developing a pipeline of biomass sales opportunities to serve existing and emerging markets, enhancing its pellet production capacity in line with expanding demand. The improved production and margins seen in early 2024 underscore a positive outlook for the full year’s sales and earnings results.
In October 2024, Drax announced a collaboration with Smart Green Shipping to trial the ‘FastRig’ sail technology, aiming to reduce fuel consumption and emissions in the pellet supply chain by up to 30% per year. This initiative aligns with Drax’s broader strategy to lower carbon emissions across its operations and enhance the sustainability of its supply chain.
The wood pellet production strategy supports the UK’s clean energy transition goals, highlighted in the National Energy System Operator’s (NESO) Clean Power 2030 report, which identifies large-scale biomass generation as essential to achieving a fully renewable UK energy system by 2030. Drax’s pellet production, alongside its flexible generation assets, is well-positioned to meet these requirements and contribute to energy security.
In 2023, Drax produced approximately 3.9 million tonnes of wood pellets, which supports both biomass generation and third-party sales. The Group has set an ambitious target to expand its annual pellet production capacity to 8 million tonnes by 2030, underscoring its commitment to scaling renewable fuel sources for energy security and emerging markets like SAF.
