Drax has agreed a decade-long tolling arrangement with West Burton C Limited, a company owned by Fidra Energy, to secure 250MW of new battery energy storage system (BESS) capacity, equivalent to 500MWh.
Under the terms of the 10-year contract, Fidra will assume responsibility for constructing the asset, carrying out ongoing maintenance and ensuring its availability across the duration of the agreement. The structure requires no upfront capital commitment from Drax, shifting development and near-term capital expenditure to the project owner.
Drax will remunerate Fidra with a fixed annual tolling fee. That fee is indexed to UK consumer price inflation (CPI) and becomes payable from the commercial operation date once the project is commissioned. In return for paying the fee, Drax will obtain full operational control and dispatch rights for the BESS and will retain all revenue streams associated with operation except for Capacity Market payments, which are excluded from Drax's revenue share under the contract.
The arrangement is conditional on Fidra taking a final investment decision (FID) on the project by the third quarter of 2026. If Fidra proceeds, the parties are targeting commercial operations in 2028. Drax has stated it expects returns from this tolling agreement to be significantly higher than its cost of capital.
The deal allocates development and performance risk to Fidra during the construction and early operating phases while giving Drax long-term dispatch control and most operational revenues, subject to the Capacity Market exception. The CPI-linked fee and the conditional timing milestones are explicit contractual features that frame the financial profile of the arrangement.
Observers will note the multi-year timetable embedded in the agreement: a FID decision due by Q3 2026 followed by a targeted 2028 commercial start. Those milestones will determine when the contractual payments and revenue flows described will begin to apply.
Key facts
- Counterparty: West Burton C Limited (owned by Fidra Energy).
- Capacity: 250MW / 500MWh BESS.
- Contract length: 10 years; fee indexed to UK CPI; Drax retains operational control and revenues except Capacity Market revenues.
- Conditions and timing: Fidra FID by Q3 2026; commercial operations targeted for 2028.
- Financial outlook: Drax expects returns materially above its cost of capital.