Drax in talks to acquire Scottish Power assets

DRAX, the UK power company, has entered talks to discuss acquiring Scottish Power energy assets from Iberdrola, Scottish Power’s parent company. The potential purchase of a portfolio of UK energy assets is another step Drax has taken as it moves away from coal.

Scottish Power, which is securing clean energy for the UK, owns and operates a range of energy generation assets including windfarms, and hydro and gas power stations. In addition, it is currently developing a 700 MW, offshore wind farm in the East Anglia region. The venture is being undertaken in partnership with Vattenfall, the Swedish power company.

Analysts expect the deal between Drax and Iberdrola will include an estimated 1,940 MW of combined cycle gas turbines and 566 MW of hydro assets. RBC estimates the combined value of the assets to be between £750m (US$ 978.8m) and £1bn, the financial Times reported, with hydro assets accounting for two-thirds of this.

The financial times also reported that the talks were only “preliminary in nature” and that there is no certainty regarding the terms or timing of any agreement. Drax added that any acquisitions made would be subject to shareholder approval and fully debt funded.

Drax operates the largest power station in the UK and is also the UK’s single largest CO₂ emitter. The company has already taken other steps to move away from carbon-intensive energy generation.

For example, Drax has already converted four of its six coal power stations to biomass. It plans to pilot Europe’s first bioenergy and carbon capture storage project, build and operate open cycle gas turbine power stations in England and Wales, and is aiming to reduce the cost of biomass for power generation before subsidies are phased out in 2027.