Drax Targets Data Centre Launch at Former Coal Site by 2027 to Feed AI Power Demand
By Axel Miller | 11 Dec 2025
Drax Group Plc plans to repurpose part of its historic coal-fired power station in Yorkshire into a high-capacity data centre as early as 2027, moving to capitalize on the acute shortage of grid connections for artificial intelligence and cloud computing infrastructure.
The company is preparing a planning application for an initial 100-megawatt (MW) facility at the Selby site. The long-term roadmap envisions expanding capacity to over 1 gigawatt (GW) post-2031, effectively turning one of the UK’s industrial icons into a hyperscale digital campus.
Brownfield advantage
The strategy mirrors a growing trend across Europe and North America, where tech giants like Amazon and Microsoft are snapping up “brownfield” energy sites. These locations possess valuable legacy assets—cooling systems, water rights, and high-voltage grid access—that allow developers to bypass years of interconnection queues.
“Drax sits on a unique asset,” noted analysts at JPMorgan. “In a world where power availability is the primary bottleneck for AI, the existing grid connection at Selby is valuable real estate.”
Drax confirmed it has secured a specialized Contract for Difference (CfD) option that allows it to request up to 500MW of power allocation specifically for the data centre between 2027 and 2031, pending regulatory clearance.
Profit upgrade and operational cuts
Shares in Drax rose more than 2% in Thursday morning trading after the company updated its guidance. Drax projects full-year 2025 core profit (EBITDA) will land near the upper end of analyst estimates, driven by robust performance in its flexible generation and biomass units.
The company is targeting £3 billion in free cash flow between 2025 and 2031, earmarking over £1 billion for shareholder returns and up to £2 billion for growth projects, including the data centre and Bioenergy with Carbon Capture and Storage (BECCS).
However, the pivot comes with operational consolidation. Drax confirmed it will shut down its Williams Lake pellet facility in Canada, citing fibre shortages, and has paused its Longview development project. The company stated it will prioritize optimizing existing assets over new pellet capacity in the near term.
Brief Summary
Drax Group plans to convert its decommissioned coal infrastructure in Yorkshire into a major data centre by 2027, targeting a long-term capacity of 1GW. The move aims to monetize existing grid connections to serve the booming AI sector. The company also upgraded its 2025 profit outlook while announcing cost-cutting measures, including the closure of a Canadian pellet plant.
Frequently Asked Questions (FAQs)
Q1: Why is Drax building a data centre?
Drax aims to leverage its existing infrastructure—specifically high-voltage grid connections and industrial cooling systems—to serve the high energy demands of AI and cloud computing companies. Repurposing a “brownfield” power station is significantly faster than building a new facility from scratch.
Q2: What is the scale of the project?
The initial phase targets 100 megawatts (MW) of capacity by 2027. The long-term vision extends to over 1 gigawatt (GW) after 2031, which would rank it among the largest data campuses in Europe.
Q3: Will the data centre burn coal?
No. The coal units at the Selby site have been decommissioned. The data centre would draw power from the grid or potentially link directly to Drax’s biomass units, which provide renewable baseload power.
Q4: How does this affect Drax shareholders?
The announcement pushed shares up over 2%. The project offers a new, stable revenue stream (leasing land and power) beyond traditional electricity generation. Drax has targeted £3 billion in free cash flow over the next six years.
Q5: What operational cuts did Drax announce?
To reduce costs and optimize its supply chain, Drax is closing its Williams Lake pellet production facility in Canada and pausing the Longview development project.
