Drax to Power UK's Largest AI Datacentre in £20bn Deal

Britain's most polluting power plant could power the country's largest datacentre under a £20bn deal announced for the Drax site in North Yorkshire. Drax, the FTSE 250 owner of the plant, has struck the agreement with infrastructure investor Brookfield and the AI infrastructure platform Radiant to develop a datacentre with an eventual capacity of more than 1 gigawatt, with operations potentially beginning by early 2028.

Drax said the development could attract more than £20bn ($26.8bn) in investment and represent "the next chapter" for the former power plant. The claim follows government signals that Drax's power generation will be limited in the future.

The company's chief executive, Will Gardiner, said the project would "help secure the long-term future of the site and protect hundreds of jobs" while "supporting the north's reindustrialisation and strengthening sovereign AI capability".

What does the deal actually involve?

The project runs in two phases. In phase one, Drax provides land and access to the national power grid through existing connections on the site. The datacentre would become operational in the first quarter of 2028 with up to 100MW of compute capacity — roughly a tenth of the project's eventual scale.

In phase two, Drax hopes to begin powering the datacentre directly by the early 2030s. The company wants to clear the regulatory approvals needed for direct supply before 2031, a deadline that matters because its subsidy regime changes that year.

The market rewarded the announcement. Drax's market value climbed by almost 9% on the London Stock Exchange to almost £3bn, and equity analysts welcomed the news.

Why is Drax looking beyond power generation?

Drax is the largest power plant in the UK. It produces almost 5% of the country's electricity by burning woody biomass pellets. That makes the site the single largest emitter of carbon dioxide, according to analysts.

The UK government does not count those emissions. Drax claims the equivalent carbon is absorbed by growing trees that provide the waste wood used to make the pellets.

That accounting is under strain. After growing concerns over the company's sustainability claims, the government promised Drax would play a "much more limited role" in future. From 2027 to 2031, the plant will have access to only half its current £2m-a-day subsidies.

The maths is simple. Drax faces shrinking revenue from generation, so it needs a new use for a site that already holds one of the most valuable assets in the British energy system: a large grid connection.

How does the deal fit government policy?

The deal emerged a week after the government published a draft national policy statement on datacentres. The statement said datacentres were "as fundamental to our economy as the railways and electricity networks on which we have long depended".

"We must take control over the development of datacentres in this country and ensure the the country and host communities benefit from them," the government said.

The policy push creates demand. Drax supplies the land, the grid link and, eventually, the electrons. Brookfield and Radiant supply the capital and the AI infrastructure expertise.

Can the grid carry an AI building boom?

The question the deal leaves open is power. The UK's congested grid infrastructure and its legally binding climate targets have raised questions over how a dash to build datacentres could be powered without relying heavily on expensive and polluting off-grid gas generation.

Drax's answer is biomass, a fuel whose carbon accounting the government has already begun to restrict. Whether regulators allow the plant to feed a 1GW datacentre directly before 2031 will decide if this deal secures Drax's revenue future or merely postpones its problem.