2nd Jan 2019 09:04
LONDON (Alliance News) - Drax Group PLC on Wednesday said it has completed the acquisition of Scottish Power's portfolio of pumped storage, hydro and gas-fired generation assets from Spanish utility Iberdrola SA for GBP702 million.
The FTSE 250-listed power generation company first agreed to acquire the portfolio in mid-October. It consists of the Cruachan pumped-storage hydro facility and run-of-river hydro locations at Galloway and Lanark, all in Scotland.
The package also includes four combined cycle gas turbine stations at Damhead Creek, Rye House, Shoreham and Blackburn Mill in south east England, as well as a biomass-from-waste facility in Daldowie in Scotland.
In early December, Drax and Iberdrola amended the acquisition terms after the General Court of the European Union in mid-November annulled the European Commission's 2014 decision to not make a more detailed investigation into the UK government's scheme for the electricity capacity market.
Both companies agreed to a risk-sharing mechanism for capacity payments in the first nine months of 2019, worth GBP36 million. If less than all of these payments are recovered and the portfolio's gross profit for 2019 is lower than GBP155 million, Drax will be paid GBP26 million by Iberdrola.
However, should the portfolio's profit exceed GBP165 million, Drax will pay an amount equal to 72% of the amount by which the profit is higher than GBP165 million, capped at GBP26 million.
Shares in Drax Group were 0.4% lower at 357.40 pence on Wednesday.
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