Drax, which is seeking permission for a major expansion of its Cruachan hydro power plant in Argyll, has reported a rise in profits as the group benefitted from high electricity prices and strong demand for renewable energy.

The company operates a number of hydro generation facilities in Scotland and has converted four coal-fired units at its Drax power station in North Yorkshire to sustainable biomass burning compressed wood pellets. During the year to April the group generated 5 per cent of the UK’s electricity and 11% of all renewable electricity, making it the UK’s largest renewable generator by output.

Adjusted earnings during the six months to June 30 were up 21% on the same period a year earlier at £225 million, which the company said reflected increased pellet sales and a strong performance across its generation portfolio. Excluding gas operations sold in January 2021, earnings from continuing operations increased by 36% on a year earlier.

Chief executive Will Gardiner said the group plans to invest £3 billion in renewables in the UK and US between now and 2030, which will create “thousands of green jobs in communities that need them”.

“As a leading producer of sustainable wood pellets we continue to invest in expanding our pellet production in order to supply the rising global demand for renewable power generated from biomass,” he said. “We have commissioned new biomass pellet production plants in the US south and expect to take a final investment decision on up to 500,000 tonnes of additional capacity before the end of the year.

The Herald: Will Gardiner, chief executive of DraxWill Gardiner, chief executive of Drax

“As carbon removals become an increasingly urgent part of the global route to net zero, we are also making very encouraging progress towards delivering BECCS [bioenergy with carbon capture storage] in North America and progressing with site selection, government engagement and technology development.”

In Scotland the company’s hydro operations in Cruachan, South Lanarkshire and Galloway performed “very strongly”. Together with its energy from waste plant in Daldowie, these assets generated adjusted earnings of £53m during the first half of the year.

Commissioned in 1926, the Lanark run-of-river scheme is made up of two hydropower stations in Bonnington and Stonebyres with a total capacity of 17 megawatts. Opened in 1935, Galloway is made up of six stations and eight dams with a total capacity of 109 megawatts.

The fuel facility at Daldowie on the outskirts of Glasgow processes sludge from hundreds of wastewater treatment plants in the west of Scotland, turning them into pellets known as “waste derived fuel”.

Drax has submitted a planning application for the expansion of its “hollow mountain” hydro plant at Cruachan on Loch Awe, which can reach full generating capacity in less than 30 seconds and has capacity for 440 megawatts – enough to power more than 90,000 homes.

READ MORE: Argyll hydro plant's value noted by Drax as gas price surges

Mr Gardiner has said that Drax will spend about £500m on the project, which will involve the addition of a second turbine hall inside the hollowed-out Ben Cruachan. Originally opened in 1965, the facility’s turbines are driven by water that is funnelled from a reservoir in the hills down to Loch Awe.

If the project goes ahead, construction is expected to begin in 2024. The work would likely employ about 900 people for much of the second half of the 2020s.

In North Yorkshire, the two remaining coal-powered units operated by Drax will at the request of the UK Government remain available to provide a “winter contingency” service to the National Grid. These will only operate “if and when” instructed to do so by National Grid from October 2022 to the end of March 2023, at which point the units will close in line with the UK’s plan to end coal-fired power generation in 2024.

Drax will receive an undisclosed fee for providing this contingency service. The group has submitted plans to build the world’s largest carbon capture facility at the North Yorkshire station.