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Investing.com -- Drax Group plc (LON:DRX) has signed an agreement to acquire three battery energy storage system projects from Apatura Limited for £157.2 million, the company announced Thursday.
The portfolio will provide 260MW of 2-hour duration storage capacity across sites in Scotland and England. Drax will make staged payments between 2025 and 2028 based on construction milestones.
Completion of the acquisition for the first two projects is expected in 2025, with the third project following in Q1 2026. Construction on all three sites is planned to begin in 2026, with the first site becoming operational in 2027.
The deal includes contractual protections against cost overruns and delays, with Apatura managing development and bearing most construction risks. Drax also secured an option for first offer rights on eight additional sites (289MW) being developed by Apatura.
Will Gardiner, Drax Group CEO, said: "This acquisition is our first investment in short duration storage as part of our FlexGen portfolio, supporting UK energy security and a clean power system."
The company stated the investment will deliver returns "significantly ahead" of its Weighted Average Cost of Capital and will be funded from cash and existing facilities.
Once operational, the battery storage assets will complement Drax’s existing portfolio of pumped storage, hydro and gas turbines. The combined FlexGen portfolio will reach 1.8GW of storage and flexible generation across nine sites, which alongside Drax Power Station’s 2.6GW, will provide 4.4GW of dispatchable generation.
The company noted that as the UK increases its reliance on intermittent renewable energy, more dispatchable generation will be required when "the wind isn’t blowing or the sun isn’t shining."
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