Drax Group has completed the sale of four combined cycle gas plant (CCGTs) to VPI Holding Limited for £193.3 million,. This includes £29.0 million of contingent consideration associated with the option to develop a new CCGT at Damhead Creek.
Damhead Creek (812MW, commissioned in 2001), Rye House (715MW, commissioned in 1993) and Shoreham (420MW, commissioned in 2001) are located in the south-east and Blackburn Mill (60MW, commissioned in 2002) in Lancashire. Drax acquired them from Iberdrola in December 2018 as part of a portfolio including pumped storage and hydro generation, which it is retaining. The majority of the value in the acquisition was ascribed to the pumped storage and hydro assets, which in the first six months of 2020 provided £35 million of Adjusted EBITDA. In the same period the CCGTs provided £18 million of Adjusted EBITDA. The CCGTs also have £89 million of Capacity Market income between 2021 and 2024.
Following the sale Drax no longer operates any CCGTs. However it still has an option to develop new gas plant at the Drax site. It won development consent for the new plant in October 2019 – a month before it announced an ambition to become a carbon negative company by 2030, in December 2019. A legal challenge to the 3.6GW project failed on 29 January but further development depends on market conditions.
Drax also conformed that on 31 March it will end commercial coal generation, with formal closure of its remaining coal units in September 2022.
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