Drax unveils £20bn plans for new data centre – powered by burning wood
Energy company Drax has unveiled plans to build a new data centre at the site of its North Yorkshire power plant, which uses wood as fuel. The FTSE 250 firm’s biomass plant is predominantly powered by wood pellets, but also uses straw and sunflower pellets. The company said it intends to use surplus energy capacity [...]
Drax, the FTSE 250 energy company, has revealed ambitious plans to construct a new data centre on the site of its North Yorkshire biomass power plant. The company's biomass plant is primarily fueled by wood pellets, but also utilizes straw and sunflower pellets. Drax intends to harness the plant's surplus energy capacity to power the new facility, partnering with AI infrastructure business Radiant.
The total capacity of the data centre is anticipated to surpass one gigawatt, with the first phase set to deliver up to 100 megawatts by 2028, and the second phase adding an additional 500 megawatts by 2031. The potential investment, encompassing semiconductor chips, could exceed £20 billion, with an initial allocation of £2.5 billion for the first phase of development.
Drax CEO Will Gardiner emphasized that the scheme would "help secure the long-term future of the site, protect hundreds of jobs, maintain a critical source of this country's energy security, support northern growth, and enable us to continue delivering for our local communities." Drax shares surged 8.5 percent to 877p upon the announcement, becoming the biggest riser on the FTSE 250.
This development follows the UK government's "British Data Centre Covenant," which allows data centres to use onsite generation while awaiting grid connections, and includes strict requirements for local community investment, job creation, and water supply protection. The announcement was prompted by delays experienced by AI hyperscalers in obtaining grid connections for data centre projects, as seen in Microsoft's withdrawal from a potential partnership with UK neocloud firm Nscale due to a projected 2030 grid connection delay.
However, Drax's decision may draw criticism from environmental groups, as burning wood for power generation has raised concerns about its climate impact, even with carbon capture. Drax has also faced scrutiny over receiving government green energy subsidies for its use of wood pellets, which is classified as a renewable energy source.
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