UK Power Group Drax Eyes U.S. Market with $12.5bn Bioenergy Investment Amid AI Energy Surge
UK energy group Drax is set to invest up to $12.5 billion in the U.S. over the next decade to build bioenergy power plants, capitalizing on generous subsidies under the Biden administration’s Inflation Reduction Act and rising energy demands driven by artificial intelligence (AI) and data centers.
The company, through its new Houston-based subsidiary Elimini, plans to construct up to five plants that will use bioenergy with carbon capture and storage (BECCS), a technology touted as “carbon negative” due to its ability to capture emissions from biomass like wood.
Drax’s U.S. expansion, driven by lucrative tax incentives and expectations of a 9% increase in electricity demand by 2028, comes amid growing pressure on the American power grid. Each plant is expected to remove 1.5 million tonnes of carbon dioxide annually, earning Drax more than $100 million in annual tax breaks.
While BECCS offers dual revenue streams—selling power and carbon removal credits—the technology faces challenges. High costs, limited sustainable biomass, and scalability issues raise concerns, as does criticism from environmentalists about the sustainability of burning organic matter. Nonetheless, Drax’s push aligns with U.S. efforts to decarbonize, as energy needs surge from AI, electrification, and industrial onshoring.
Key points:
- Drax’s U.S. Investment: Drax plans to invest $12.5 billion in building bioenergy power plants in the U.S. over the next decade.
- Carbon-Capturing Technology (BECCS): The plants will use BECCS technology, which burns biomass like wood and captures emissions, potentially making it “carbon negative.”
- U.S. Tax Breaks: Drax is benefiting from U.S. subsidies under the Inflation Reduction Act, earning $100 million in tax breaks per plant each year.
- Rising Energy Demand: The U.S. needs more electricity due to growth in AI and data centers, with demand expected to rise 9% by 2028.
- Carbon Removal: Each plant is expected to capture 1.5 million tonnes of CO2 annually.
- Making Money: Drax will earn money by selling both electricity and carbon credits.
- Environmental Concerns: There are worries about the sustainability of burning biomass, with critics concerned about environmental impacts.
- Meeting Global Energy Needs: This project helps the U.S. meet growing energy demands and supports global clean energy goals.
Source: Financial Times
