By Raechel Thankam Job and Susanna Twidale LONDON, Dec 11 (Reuters) - Drax Group said on Thursday it could convert part of its power station in Yorkshire, northern England, into a data centre as soon
Drax to Transform Coal Power Station into Data Centre by 2027
By Raechel Thankam Job and Susanna Twidale
LONDON, Dec 11 (Reuters) - Drax Group said on Thursday it could convert part of its power station in Yorkshire, northern England, into a data centre as soon as 2027, using land, cooling systems and transformers once dedicated to coal generation.
Europe's ageing coal and gas-fired power plants are looking for a renewed life as tech giants such as Microsoft and Amazon seek to repurpose them into data centres, using existing access to power and water, to meet the surge in AI-driven energy demand.
Drax is preparing a planning application for a potential 100-megawatt data centre at the site, with ambitions to expand capacity beyond 1 gigawatt after 2031 as it seeks to capitalise on soaring British power demand driven by artificial intelligence.
"We would effectively provide the land and the power connection and the power working with a data centre developer," Drax CEO Will Gardiner said in an interview.
Rapid data centre growth has seen firms seeking sites that already have power connection to avoid lengthy queues to connect to the grid.
RWE last month posted a 225 million euro ($263 million)book gain from the sale of a former coal-fired power plant site in Britain to a data centre developer.
"While nothing has been agreed, we believe this is a more optimistic timeline than investors would otherwise expect," JPMorgan analysts said in a note of Drax's plan.
PROFIT SEEN AT TOP END OF MARKET VIEW
The power producer's shares rose more than 2%, as it also forecast 2025 core profit around the top end of market expectations on growth across its flexible generation, pellet production and biomass units.
Drax is targeting 3 billion pounds of free cash flow between 2025 and 2031 to fund more than 1 billion pounds in shareholder returns and up to 2 billion for growth investments.
It is also closing its Williams Lake pellet plant in Canada and pausing its Longview project, saying it does not expect to invest in additional pellet production capacity in the short to medium term.
($1 = 0.7478 pounds)
($1 = 0.8552 euros)
(Reporting by Raechel Thankam Job, Yadarisa Shabong in Bengaluru and Susanna Twidale in London, Editing by Nivedita Bhattacharjee, Rashmi Aich and Alex Richardson)
