Drax, an FTSE 250-listed energy company, announced plans to construct a major artificial intelligence data centre at its existing biomass power facility in North Yorkshire. The facility currently operates primarily on wood pellets supplemented by straw and sunflower pellets. Through a partnership with AI infrastructure provider Radiant, the company intends to leverage surplus power generation capacity at the site to support the new data centre development.
The proposed facility is expected to eventually exceed one gigawatt of capacity, with development occurring in stages. The initial phase aims to deliver up to 100 megawatts of capacity by 2028, while a second phase is planned to add an additional 500 megawatts by 2031. The total investment, including semiconductor chip infrastructure, could exceed £20 billion, with the first development phase requiring approximately £2.5 billion in initial capital.
Company leadership indicated the project would strengthen the long-term viability of the North Yorkshire site while preserving hundreds of jobs, maintaining domestic energy security, supporting regional economic growth, and continuing community investment initiatives. The announcement generated immediate positive market response, with Drax shares rising 8.5 percent to 877p, making it the largest percentage gainer on the FTSE 250 index.
The project aligns with recent government policy initiatives promoting data centre development. The Chancellor introduced a “British Data Centre Covenant” establishing requirements for data centre operators to invest locally, create employment, and protect water resources. In exchange, qualifying facilities can secure grid connections and, temporarily, construct onsite power generation while awaiting broader network connections. This policy responds to widespread delays experienced by major technology companies seeking grid access for data centre projects.
The initiative may face environmental scrutiny given its reliance on biomass combustion for power generation. Recent reports have raised questions about the climate impact of wood-based power generation compared to alternative energy sources. Additionally, Drax’s historical receipt of government renewable energy subsidies has drawn critical attention from environmental advocates regarding the classification of biomass as renewable energy.
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