Drax Group has agreed a £20bn partnership with Brookfield Asset Management and AI infrastructure platform Radiant to build the UK's largest datacentre on its North Yorkshire biomass plant site, targeting 1GW capacity with phase one operations by Q1 2028.
Key Takeaways
- Drax agrees £20bn ($26.8bn) deal with Brookfield and Radiant for 1GW+ AI datacentre on North Yorkshire biomass site
- Phase one: 100MW operational by Q1 2028 using existing grid connections; direct private-wire supply targeted by early 2030s
- Drax biomass subsidies halve from £2m/day to £1m/day from 2027-2031, creating revenue cliff the datacentre aims to offset
- Drax shares surge ~9% to £3bn market cap; UK government draft policy elevates datacentres to critical national infrastructure status
- Key uncertainties: private-wire regulatory approval, planning consent, PPA pricing, and Brookfield/Radiant capital structure
Executive Intelligence Brief
Deal Structure and Phasing
Under the agreement, Drax provides land and existing grid connections for the initial phase, enabling up to 100MW of compute capacity to come online by the first quarter of 2028. The company aims to secure regulatory approvals for direct private-wire supply to the datacentre before 2031, bypassing the congested national grid and locking in long-term revenue as its biomass subsidy regime contracts.
The full development targets more than 1GW of capacity, which would make it the UK's largest datacentre by power draw. Brookfield and Radiant bring infrastructure capital and AI-specific technical expertise respectively, though the equity split and capital commitment schedule were not disclosed.
Biomass Subsidy Cliff and Strategic Pivot
The deal emerges as Drax faces a halving of its biomass subsidies from £2m per day to £1m per day between 2027 and 2031, following government conclusions that the plant should play a 'much more limited role' in the UK's power mix. The North Yorkshire facility, which burns woody pellets to produce roughly 5% of UK electricity, is the country's single largest CO2 emitter, though emissions are currently excluded from national accounting under biomass carbon neutrality assumptions contested by analysts.
Chief executive Will Gardiner framed the project as securing 'the long-term future of the site and protect hundreds of jobs' while 'supporting the north's reindustrialisation and strengthening sovereign AI capability'. Drax shares rose nearly 9% on the London Stock Exchange, lifting market capitalisation to approximately £3bn.
Grid Congestion and Policy Context
The announcement follows the government's draft national policy statement on datacentres, which declared them 'as fundamental to our economy as the railways and electricity networks on which we have long depended'. The statement emphasised the need to 'take control over the development of datacentres in this country and ensure that the country and host communities benefit from them'.
UK grid congestion remains a critical bottleneck for datacentre deployment, with lengthy connection queues forcing some developers toward off-grid gas generation. The Drax site's existing high-voltage grid connections and potential for private-wire supply offer a structural advantage, contingent on regulatory approval for direct supply arrangements.
Forward Outlook and Key Milestones
Critical path items include: planning consent for datacentre development on the biomass plant site; regulatory approval for private-wire direct supply before the 2031 subsidy expiry; the government's final datacentre national policy statement; and Brookfield/Radiant capital deployment against phased capacity targets. The Q1 2028 operational target for phase one implies construction commencement in 2026.
