Drax: Pellet production up 54% during first half of 2022

Drax Group plc on July 26 released financial and operational results for the first half of 2022, reporting significant increases in both operating profit and wood pellet production when compared to the same six-month period of 2021.

Drax produced approximately 2 million metric tons of wood pellets during the first half of this year and shipped 2.4 million metric tons. The company produced and shipped 1.3 million metric tons of pellets during the same period of 2021. An estimated 1 million metric tons of wood pellets were sold to third parties during the first half of 2022, up from 400,000 metric tons during the same period of last year.

According to Drax, its cost to produce wood pellets and transfer them to a port in North America for onwards transit was at $146 per ton during the first half of 2022, up 2 percent when compared to last year. The company primarily attributed the increase to the inflationary impact on utilities and bunker fuel.

Drax added 400,000 metric tons of new pellet production capacity during the period, with the Demopolis and Leola plants undergoing commissioning and expected to reach full production capacity during the second half of this year.

Will Gardiner, CEO of Drax, said the company plans to make a final investment decision on up to 500,000 metric tons of additional wood pellet production capacity before the end of 2022. That extra capacity supports Drax’s ambition to boost its wood pellet production capacity to 8 million metric tons by 2030, with 4 million metric tons per year of wood pellets sold to third parties.

In its financial report, Drax also discussed its planned bioenergy carbon capture and storage (BECSS) project at Drax Power Station. The company submitted a planning application for the BECCS project in June and is conducting a front-end engineering and design study. The company also noted it is working to develop models and locational preferences for international BECCS developments, with a primary focus on North America.

Drax’s pellet production business contributed £45 million of adjusted EBITDA during the first six months of 2022, up 13 percent when compared to last year. Total adjusted EBITDA was at £225 million for the first half of the year, up from £186 million during the same period of last year. Operating profit was £207 million, up from £84 million.

A full copy of Drax’s financial report is available on the company’s website.