Drax Group Stock

Good morning, everybody, and thank you for joining the call. It's Will here, and I'm joined by Frank, our CFO. I'll provide an overview of the first half before handing it back to Frank to take you through the numbers.

Ladies and gentlemen, welcome to the Drax plc Half Year Results 2026 Conference Call. I'm Vicki, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Will Gardiner, Group CEO. Thank you.

Thank you, and good morning, everybody. I appreciate you all joining the call. I'm joined on the call by Frank Lemmink, our CFO. I'll provide an overview of the first half before giving it back to Frank to take you through the numbers. And then I'll take you back -- take it back to take you through the progress we're making on our growth strategy, and we're then happy to take your questions.

We delivered a good first half performance, underpinned by a continued focus on safe and efficient operations. We provided around 6% of U.K. power and 10% of U.K. renewables. In May, we commenced operations of Hirwaun Power Station, adding another 300 megawatts to our portfolio, and we continue to upgrade 2 units at Cruachan, which will add a further 40 megawatts.

And over the last 8 months, we've made tremendous progress on our plans to invest in flexible and renewable generation, adding Flexitricity and over 700 megawatts of owned and tolled batteries. Reflecting these developments, we're now targeting an increased Group EBITDA from GBP 650 million to GBP 800 million in 2029 once those BESS developments are fully operational.

And these numbers are before the proposed acquisition of Bluefield Solar Income Fund, BSIF, or developing any of the further BESS, solar or wind options that we have. At Drax Power Station, we're continuing to develop options to utilize 4 gigawatts of capacity, including a data center. And as we progress these opportunities, we remain committed to our capital allocation policy and delivering attractive returns for shareholders.

So on Page 4, I want to spend a little bit of time on this slide as it demonstrates how we have repositioned our business. We increasingly manage, by which I mean generate, trade, optimize or provide route to market or tolling services, many different types of generation and storage. Each one of these activities will create value in different ways for the Group and for the U.K. system, leveraging our capabilities and experience.

Our thesis is that the U.K. energy transition will continue to move at pace, and we are positioning our company to grow with that transition. We expect power demand to grow significantly, and we expect this demand primarily be met by renewables, which will require more flexibility on the system.

So since 2018, we have grown the business and transformed from a single site operation with 2.6 gigawatts of biomass to a 4 gigawatt portfolio of pumped storage, hydro, biomass and route-to-market capacity at the end of last year. And I want to highlight the route-to-market services we provide to small-scale solar and wind plants, over 2,000 sites and 800 megawatts, which generate on the order of GBP 10 million of earnings per year.

And for reference, that is also what we will be doing for the Bluefield portfolio, which is of a similar size. Now over the course of this year, our portfolio will increase to 6.1 gigawatts with the addition of our first OCGT site Hirwaun, which I will talk more about in a minute, further route-to-market capacity via Flexitricity, which we've already got and the acquisition of Bluefield, which is expected to close tomorrow.

Now beyond that, we have development projects already post FID that will grow our megawatts under management to 7.4 gigawatts in 2029, giving us multiple generation technologies across renewables and flexible generation, not to mention the significant development options we have beyond that.

Interestingly, our strong position in Flexgen means we're able to develop options for solar and wind from a position of strength and the ability to manage those assets within the portfolio. In June, we announced the proposed acquisition of BSIF, a U.K.-listed investment fund, which operates a U.K. portfolio of about 900 megawatts of operational solar and wind assets in addition to a development pipeline of 2.9 gigawatts, which we will assess in line with our capital allocation policy.

For the financial year ended June 30, 2025, EBITDA was about GBP 130 million with a high level of contracted cash flows. And to be clear, the earnings of BSIF are not included in the GBP 650 million to GBP 800 million EBITDA target that I outlined before. To update you, a BSIF shareholder vote took place on the 24th of July and 99% of shareholders voted in favor of the acquisition.

Our court hearing to -- sorry, to approve the scheme is due to take place tomorrow, the 31st of July, after which, meaning later that day, the acquisition is expected to complete. So the acquisition supports U.K. energy objectives and strategically moves us to having 3 substantial generation businesses: Biomass, Flexgen, and solar and wind.

The acquisition is highly complementary to our existing operations, offering or adding structured and stable cash flows underpinned by longer-term renewable incentive schemes and PPAs, which complement the higher but potentially more volatile cash flows associated with Flexgen. And beyond that, we see an additional opportunity to unlock significant further trading and optimization margins and operational and energy services synergies.

We expect to provide more detail on BSIF in September. At the end of May, Hirwaun Power, our new 300-megawatt OCGT commenced operations, and you can see it on the slide there. The Power Station represents an investment of over GBP 100 million in South Wales, supporting energy security, electrification and economic growth for the whole of the U.K. And Frank will provide some additional and quite interesting detail on how it's performed in a few minutes.

Hirwaun sister sites, Millbrook and Progress are expected to commission from late this year through 2027. This is later than was expected and reflects delays by the relevant authorities in connecting the sites. Nevertheless, once fully operational, the 3 stations will provide combined capacity of around 900 megawatts and be remunerated under 15-year capacity market agreements worth around GBP 260 million.

And of course, those capacity payments are additional to revenues we expect to generate from both peak power generation and system support services. Sustainability, important as always, is an area where we continue to make progress against climate, nature and people initiatives.

Recognition of this progress came in January with a CPD -- sorry, CDP, AA rating. And in March, MSCI upgraded Drax from A to AA, reflecting our environmental disclosures, climate transition planning and continued implementation of a Group-wide sustainability framework.

Now I'll pass it over to Frank, who will take you through some of the numbers.

Thank you, Will, and good morning, everyone. As Will said, we have made tremendous progress executing our strategy, increasing our Flexgen capacity with OCGTs, Cruachan expansion in process and our investments in BESS.

We are expanding our trading and optimization capability while bringing Flexitricity platform into the portfolio, and we are adding a new branch with BSIF solar and wind portfolio as well as a significant pipeline of development options. On a personal level, I'm really happy to be part of this in solving the strategic puzzle and implementing our strategy at Drax.

So we have a strong business today, and we will enhance our value through delivering our strategy. Our balance sheet is strong. We are generating cash flows, which can support value-accretive growth and returns to shareholders. But we must operate well and safely and execute our plans diligently to realize this. This includes delivering the value from our acquisitions.

So in the first half of 2026, we performed well. Good results generating GBP 279 million of adjusted EBITDA. This is lower than in '25 that was expected and reflects lower achieved forward power prices year-on-year. Adjusted earnings per share of 29.8p was a decrease on the first half of 2025.

And this, of course, reflects the reduction in EBITDA and also noncash foreign exchange movements, which were partially offset by a lower depreciation and amortization charge. Net debt of GBP 1.025 billion was 1.3x the last 12 months EBITDA, and this remains significantly below our long-term target of around 2x. And this does not include the impact of BSIF acquisition.

Total cash and committed facilities was around GBP 630 million, which is a strong position, and this supports our growth plans for the Group. Our expected full year dividend of 32.2p per share is an 11% increase on 2025, in line with our long-term growth rate. This reflects the confidence we have in our business.

And as is our custom, we propose to pay 40% of this as an interim dividend, which equates to 12.9p per share. Then the final leg of our capital allocation policy is returning excess investment capital to our shareholders, and we have returned GBP 47 million via share buybacks year-to-date. And moving on to the next slide, talking a little bit more on the performances by our businesses.

Starting with our Pellet Production and Biomass Generation business, which we see increasingly as interlinked through the vertical integration between our operations in the U.S. South and the Drax Power Station. Pellet Production's EBITDA reduced from GBP 74 million in the first half of '25 to GBP 64 million in the first half of '26. It is a function of reduced volumes because of plant closures and outages.

And we also showed continued progress on cost reductions, reducing the cost per tonne of biomass produced. And this reduces the headline size of our Pellets business. But because these are internal sales to our Drax Power Station, this actually reduces the costs that are passed through to our generation business, resulting in a lower cost of biomass feedstock as part of a well-established cost plus transfer pricing methodology.

Then talking about Biomass Generation, which has performed well and continues to produce large volumes of renewable electricity and system support services, inclusive of a major planned outage. And as I mentioned, the business also benefits from the cost reductions in the U.S. South and therefore, lower prices of internal pellet supply. Our Flexgen business then; EBITDA reduced from the previous year. This is because of an unplanned outage on the Cruachan Units 3 and 4, which is caused by a grid connection failure of assets owned by Scottish Power Energy Networks or SPEN.

And as Will noted, planned outage work on these units continues as part of a turbine upgrade, which will, in due course, add 40 megawatts of new capacity. Despite the headwind from the outages on the Units 1 and 2 -- from these outages, the Units 1 and 2 performed very well and maintain a very high utilization rate. Hirwaun also -- has also performed well.

We have received capacity market payments for the full 6 months this half year. And since commencing operations in late May, we have been providing power generation and system support services as well. I will talk more about that shortly. Flexitricity performed in line with our expectations and in Energy Solutions, our Industrial and Commercial I&C business performed well as well.

It maintained a broadly consistent margin on a small revenue base against a background of lower contracted power prices. So a really good result. Then finally, development expenditure; development spend has reduced as we have been very disciplined in allocating capital to large capital projects against a marked backdrop that does not currently support significant investment in carbon removals.

This is in line with some of the expected cost savings that we highlighted at our full year results earlier this year, and we are now realizing this. Then a little bit more on Hirwaun, and I think this is a very interesting slide. In its first month of operations, Hirwaun performed very well. Our OCGTs are designed to operate at times of peak demand, which we normally expect to be focused on winter periods.

However, reflecting high summer temperatures and lower wood speed, we saw a significantly higher demand for Hirwaun services in power generation and balancing markets. In addition, Hirwaun is fitted with a clutch mechanism, which allows the turbine to synchronize with the grid in a non-generation mode, helping to stabilize the system without producing any electricity.

In total, the station operated in this mode for around 440 hours in June, which is around 60% of the time, as you can see in the graph, as well as operating in the wholesale and balancing markets. And we see this flexibility and breadth of the market opportunity as a source of value to us, but also an essential service to the system, providing stability to the grid, which is absolutely essential.

As power demand grows and the system evolves to include more intermittent renewable and flexible generation, we expect these themes will become more pronounced, and this informs our investment case for flexible generation and is also why we believe that having 3 of these OCGTs over time in our portfolio will be value generative.

Then moving on to the balance sheet. Maintaining a strong balance sheet remains a key priority. We have no significant maturities remaining in '26, as you can see. The acquisition bridge facility will become available upon the completion of the BSIF deal tomorrow, we expect, and would allow us to repay shareholders in all of BSIF's debt if required. There are some facilities that we will likely retain subject to bank agreement.

And then we have expanded maturities on some of our facilities in the first half of this year as well. And because of that, we have significant headroom over our short-term liquidity requirements, as you can see. Credit ratings then; following the BSIF acquisition process, we have engaged all 3 of our rating agencies, and they -- all 3 of them have reiterated our crossover credit rating after the announcement of the proposed BSIF acquisition.

They note the diversification benefits and improved business risk, earnings quality and debt capacity. And these conclusions support our ability to grow our business whilst maintaining a strong balance sheet. Moving on to capital investment. We have continued to invest in growth and in our core business, including BESS, pumped storage and the OCGTs. The ongoing planned outage at Drax Power Station is progressing well.

And we continue to target between GBP 210 million and GBP 250 million of capital expenditure for the year, and this excludes our acquisitions. Flexitricity has completed, as you know, and BSIF, as Will said, could be finalized tomorrow. Then a bit on cost management. Strong cost discipline is an integral part of our culture.

Being disciplined on cost supports our upgraded to 2029 EBITDA target. We are making good progress, putting in place the structures and plans to allow us to succeed and deliver long-term value to stakeholders. This includes both staff cost reductions and reduction in third-party costs. Earlier this year, we set out a target to establish structural savings of over GBP 150 million per year by 2027 compared to a 2024 base year.

We are making really good progress, and we will continue to keep an iron discipline with regards to cost control. This is something which I have done successfully in my previous company and something I'm seeking to embed deeply within the Drax culture as well. Then finally, our capital allocation policy.

This policy remains unchanged and is at the heart of our financial decisions that we make to make sure that we can successfully deliver growth, value and income to shareholders. Our balance sheet is strong, and we remain committed to a long-term target of around 2x net-debt-over-EBITDA.

We will continue to invest judiciously in the core business to deliver safe and efficient operations and deliver options for growth in flexible and renewable energy. Our return to shareholders remain a critical part of our investment proposition. And since 2017, we have returned over GBP 1.2 billion via dividends and share buybacks. Since 2017, the dividend per share has grown on average by 11% per annum, including an expected increase of 11% in 2026.

Income returns to shareholders are an important part of our investment case, and we remain firmly committed to our policy to pay a sustainable and growing dividend. And then lastly, to the extent there is a surplus of capital beyond our investment requirements, we will consider the best way to return this to shareholders.

The buyback, as you know, is currently on pause, and we will evaluate this program along with the growth opportunities that are available to us. So I'm excited to be here. I'm very pleased to share these results with you, and I look forward to discussing them with you further in due course.

And with that, Will, I hand back to you.

Thank you, Frank. Appreciate that. If I move on to Page 18. So NESO's future energy scenarios show power demand is likely to double over the next 25 years, driven by the electrification of heating, transport and new industrial demand like data centers.

To help meet this demand, there will need to be up to a sevenfold increase in wind and solar, while at the same time, unabated gas is expected to retire from the system, meaning that while carbon emissions will reduce, the system also will become progressively more dependent on intermittent renewables as well as over time on inflexible nuclear power.

And as a result, there's likely to be either too little or too much power on the system at any one point in time. So this system transition creates opportunities for significant investment in renewables as well as in flexible generation, principally in BESS, which NESO believes could quadruple in capacity.

So again, as you can see, we think there's a very strong tailwind driving our investment thesis, right? And I would also note that we have a strong view that existing cash flow from incumbent assets are particularly valuable in a world in which it's difficult to connect additional capacity to the grid.

We've structured our BESS investments to account for this risk and the proposed BSIF acquisition is another example of how we're addressing it. As you know, we're developing a gigawatt scale pipeline of BESS opportunities, which complement our existing flexible generation portfolio. And having the right assets in the right location at the right time will be critical to success as well having the tools to manage the portfolio effectively.

And we are making outstanding progress in this area and have committed about GBP 500 million for over 700 megawatts of capacity as well as acquiring Flexitricity. As you know, we see 2 principal and slightly different routes to creating value from BESS. Firstly, the ownership of physical assets where we believe the locations that we have chosen are optimal and where there are opportunities to invest in the sites further over the long-term.

We've acquired 3 development projects for 260 megawatts under a fixed price deal with structures in place that protect us in the event of cost or schedule overruns. That deal also gives us option rights over an additional 289 megawatts of capacity. The second route is through floors and tolls, which provide us with an additional opportunity to access the BESS market and use our deep expertise in trading and optimizing flexible assets.

In that space, we've entered into agreements for 450 megawatts of tolls with the developers, Fidra and Zenobe. We will pay them a tolling fee in return for which they will -- they are responsible for building, maintaining and making assets available for us to optimize. We will keep all the revenues from operations other than capacity payments and certain other immaterial ancillary revenues.

Importantly, both projects have now taken FID. And finally, the final piece of this puzzle is Flexitricity, which provides a scalable, best-in-class platform for optimizing those assets, both for ourselves and also for third-party owners. So turning to the next slide. So we're growing a balanced portfolio in the U.K., and let me provide a little more color on how we're expecting to do that.

So first, we have an existing portfolio, an existing set of expertise that operates across the U.K. power system today. We operate and trade large-scale generation assets, Drax Power Station, Cruachan, our first OCGT and hydro power. And as you know, we're developing those attractive portfolio of BESS assets.

And the second thing that we do is we provide route-to-market services for BESS, wind and solar assets, both through our existing business and also through Flexitricity, which we've just recently acquired. In combination, that gives us close to 2 gigawatts for over 2,000 small renewable assets as well as grid-scale assets.

Thirdly, we're already a major player in the I&C supply space, giving us significant insight -- the demand side of the equation. So it's logical for us to grow that portfolio by adding solar and wind, which we're starting to do by adding almost 1 gigawatt through the Bluefield acquisition that again, we expect to close tomorrow.

So beyond that, we would look to grow the portfolio across the piece by developing the significant opportunities for growth that we already have. And just by way of example, BSIF brings a pipeline of options in BESS and solar with over 500 megawatts of projects, which already have 15- to 20-year CfDs [ as ] only a small part of their overall development pipeline of 2.9 gigawatts.

And we will also look to further M&A as and when appropriate. So you put that all together, and we already have strong visibility of growing our megawatts under management that underpins our upgraded expectation for EBITDA in 2029 of between GBP 650 million and GBP 800 million.

And again, please note, which I'm sure you guys have all done, that this does not include BSIF, which as we have said already adds another -- sorry, delivered EBITDA of GBP 130 million in 2025.

But if you put that all together and you say, well, what is the portfolio that we have the opportunity to develop, we have the potential to grow to 12 gigawatts of operational assets, including what we've already got, what we're already building and options on sites that we already have. And all of that is before we start even talking about DPS, which we'll do now.

So if I go to Page 22, the Drax Power Station site, as you know, located centrally in the U.K. and next to one of the country's largest substations includes over 1,000 acres and has 4 gigawatts of grid access. It already has 2.6 gigawatts of flexible renewable generation running and has cooling systems on a secure site very close to the U.K.'s fiber optic network.

Now as a first step, it's already the U.K.'s largest power station, as you know, and we expect Biomass Generation to continue to play a long-term role in meeting the U.K. energy demand. On top of that, we're developing plans for a data center, which I'll talk about in a minute. On top of that, we're also evaluating options to utilize inactive legacy infrastructure to provide system support services.

For example, we can use power from the grid to rotate and synchronize the legacy units to the grid to provide inertia and voltage management, thereby helping to stabilize the system in exactly the same way, as Frank mentioned that the OCGTs operate in clutch mode. Finally, in the long-term, we are also exploring opportunities to utilize 1.4 gigawatts of non-biomass grid access for new generation.

So let's talk a little bit about the data center. So the size, location and infrastructure of the site make the vast power station a good fit for a data center, and we're continuing to develop an option to do that. And as soon as we have more details, we will share those with you. What I can say is the following.

It will be a 3-phase project. The first phase for about 100 megawatts using existing infrastructure and transformers to import power directly from the grid. And we will be submitting a planning application for that 100-megawatt data center in the second half of the year. Beyond that, we have 2 more phases that are both behind the meter.

The second phase aims to utilize about 500 megawatts of capacity before 2031. And as you know, this is still during the period of the CfD. And so that will be subject to agreement with the U.K. government. And while we haven't had substantial discussions with the government, we are clearly making them aware of our progress as we work on this. And the third phase would follow from 2031 afterwards, adding further capacity up to 1 gigawatt and beyond.

Ultimately, this development will represent a multibillion-dollar investment in the U.K., creating thousands of jobs while continuing to support energy security through 2031 and beyond. So turning on Page 25. Just in short, summary. So we performed well again in the first half of 2026. We're already a leading provider of flexible renewable generation in the U.K., and we're taking advantage of a great opportunity to grow that position and develop a full-fledged multi-technology generation portfolio, including solar and wind.

We've absolutely begun at pace that investment program, as I've described, and look forward to growing our business through the rest of the decade and well beyond, creating value by investing in the U.K. energy transition. And of course, as we always have been, we will be disciplined in how we approach these opportunities in line with our existing capital allocation policy, and we will be laser-focused on value creation.

But let me close by returning to what I said at the start. The U.K. needs to meet a growing demand for power while maintaining energy security in a cost-effective manner and continuing to decarbonize. That is the essence of the energy dilemma. And we believe we can play a significant role in meeting all 3 of those needs.

Since 2018, we've grown our business from being a single site 2.6 gigawatt biomass generator to being a multisite portfolio with a range of generation technologies and route-to-market services. We already have more than visibility. We have clearly planned and capital in place to grow that portfolio through the end of the decade across multiple technologies to 7.4 gigawatts under management, almost doubling the position that we had at the end of 2025.

In doing so, we make Drax a business focused on a broad range of flexible as well as long-term contracted intermittent renewables. Beyond that, we have a pipeline of further opportunities in both flexible generation and renewables as well as the Drax Power Station, which together represent around 12 gigawatts of operational assets that we can own or manage as well as having opportunities for further growth.

And in taking these actions, we believe we can deliver value for our shareholders, all of our stakeholders, while at the same time supporting the U.K. energy objectives and promoting economic growth. And of course, we will update you in due course as we continue to roll out this investment plan.

With that, we're happy to take questions.

[Operator Instructions] The first question is from Pavan Mahbubani, JPMorgan.

I'll start with 2, please. Firstly, Will, toward the end of your speech, you talked about the progress on data centers and looking to file a planning application in the second half of this year. Can you shed a bit more light as to how the discussions are going with the relevant counterparties? And should we see the intention to file a planning application as significant progress in those conversations? Any color there would be helpful.

And then secondly, maybe more a point of clarification. If I compare today's guidance of GBP 650 million to GBP 800 million post '29 to what you had as GBP 600 million to GBP 700 million before, is the idea that it's GBP 50 million to GBP 100 million coming from BESS or are there any changes to the scope of the GBP 600 million to GBP 700 million versus where we are today?

Thanks, Pavan. Why don't I take the first one, and then I'll ask Frank to take the second one. So on the data center, I think we continue to be in the market talking to various parties. As you know, we've been working with a developer to help us work through the program.

I mean, effectively, the decision we've made is that for the 100 megawatts, we're basically putting in a place a planning application that we think will make our offering more attractive and move us a step forward as we continue those discussions. So I wouldn't take it as indicating that we sort of -- that there's something more in those discussions than we've already disclosed. Frank?

Yes. And the second question, you're absolutely correct. The previous guidance was GBP 600 million to GBP 700 million. We've added our expectation for the BESS EBITDA range to that of GBP 50 million to GBP 100 million, which takes you to GBP 650 million to GBP 800 million. And that's still before BSIF, of course, if you add, for example, in 2025, GBP 130 million, and you can make the calculation yourself.

The next question is from Alex Wheeler, RBC.

Just a couple for me as well, sticking with somewhat similar themes, but I just wanted to check on -- just following up on Pavan's question on the data center point. Is this the only step in terms of the planning that you would take prior to announcing an agreement with an offtaker or are there other things that you may ultimately do prior to that announcement coming through?

And then just on the GBP 50 million to GBP 100 million on the BESS, I'd be interested to understand how well underpinned you see the GBP 50 million and then what has to happen? And how do you see the opportunity in the market to be at the upper end of that range?

And then just lastly, when you talk about the development of other opportunities at Drax Power Station, particularly on the system support services, I appreciate there's a range there, [ '25 ] to 2031. But when -- what may happen there? And I guess, when may we see that potentially coming into numbers?

Okay. So on the data center point, I think the simple answer, Alexander, I appreciate you're looking for other catalysts or other milestones that we might have. I think it's probably -- there's nothing that I can point to now. There would be sort of additional progress that we could sort of point to before actually probably announcing we got a customer.

So I would say, as and when we have other information that we think is of value, we will obviously provide that. On the data -- on the BESS stuff, I mean I think that the -- it's really about the range in terms of the volatility in the market, I would say. But I think the GBP 50 million is something we would be quite confident in a downside year that we recover that, GBP 100 million would be more of the upside year.

It's -- I mean it's an interesting one because obviously, the market this summer has been a bit unusual, different from normal. I mean the sort of the idea that there's more volatility in summer that was probably more expected in winter in the past. But again, I think it's a function of volatility, I think, quite simply, right? And then on the system support stuff, I mean, the sort of the system operator is running auctions for system support services.

One of those has happened. I think the decision on that is, I think, sometime middle of next year. And that actually is then I think that's when we would start building and that takes some time. So I would expect those sort of significant projects to be several years away before they would start producing anything as and when we would sort of win a contract.

The next question from Dominic Nash, Barclays.

I've actually got 3, apologies. The first one is on security of supply. And I think the unprecedented situation that you've kind of alluded to at the moment with the geopolitics, but also the extreme weather. I mean I'll be interested in your view on the threat and potential opportunities for Drax, firstly, with the potential gas crunch coming in winter.

Clearly, we've got very low gas storage levels -- we have none in the U.K. And if demand does pick up, then clearly whether or not Drax can benefit from that. The second one is clearly also on the electricity and the sort of alleged cover up by sort of the U.K. grid came quite close to a blackout, whether or not that gives you -- if you can give us some update on what your views there.

And then, of course, on the water angle as well, half the country is now in drought. Do you see the potential for extraction and cooling issues for Drax and how your hydro assets are going to perform on those things? Quite a long first one, but it's around, they're all linked. The second 2 are actually quite quick.

Remind me on data centers, I think Ofgem is announcing GBP 0.7 million per megawatt development sort of transmission fee. Are you going to be subject to that as part of your development? And thirdly, can you just remind me again on the BESS GBP 50 million to GBP 100 million, I presume you're relying on the T minus 1 capacity auction or are we -- can we model a T minus 4 in that one? And then how can that fit in 2029?

Okay. So let me -- I think there's about 8 questions.

I have another 10, if you want them.

Okay. So let me let me start with the first one. So in terms of security of supply and sort of extreme weather, gas crunch, et cetera, I guess the first thing I would say is that we've run our assets as we always would have expected to run them. We obviously try to endeavor to provide as much supply as we could.

And so I feel as though we've absolutely done what we wanted, and we've also responded to the system operator asking us to run and/or in the case of Cruachan run pump, et cetera. So we're very comfortable with the role we're playing in trying to provide energy security for the U.K. In that context, very pleased that the first of the Open Cycle's was online in June. That was doing a small part to help with the security supply challenges.

I think it's sort of a simple thing to say, it would have been nice to have 2 other ones up and running at the same time for us and for the system. And unfortunately, they have not been running. I can't comment on what's happening inside the system operator. I can't really comment on how close or not we were to sort of having a system sort of blackout type event.

But I would say that I think that the summer situation is going to become increasingly more challenging relative to what it has been, right? You get this combination of a heat wave across the continent, challenges with nuclear cooling water, et cetera, challenges and efficiency of various different types of technologies as it gets hotter and air conditioning sales are going through the roof, right?

So I mean it's probably something we should have and we will be expecting to be the new reality. So -- we don't expect any water issues at the Drax Power Station or anywhere. I mean the hydro, clearly the run-of-river is very much sort of water, rain dependent. So that is -- to the extent there's less water, there's less generation.

Cruachan on the other hand, there's plenty of water on the bottom and the top. So that isn't very much rain and drought dependent. On your second question, because we're an existing connection, we don't expect to have any issues with that topic. And then on the BESS topic, we have some T minus 4 capacity contracts in place already.

And I think the important point probably there is that given the derating on the batteries, it's not a very significant piece of the puzzle. And on the tolled assets, I think the owner actually keeps those payments anyway. So I think that was -- that's probably about 4 of the questions. Are there 4 that I missed?

No, I think you answered them [indiscernible].

Feel free to come back if you have other ones.

The next question is from Mark Freshney, UBS.

Firstly, just on the strategic review of the Canadian assets. I just wondered whether you'd be able, Will, to give any kind of overview on what the options are or anything that you found and what the benefit could be to Drax?

And just secondly, just on -- I mean, it sounds like you've been seriously let down by National Grid hooking up the 3 OCGTs, which has cost you money and also by Scottish Power. Surely, there are options, if only through insurance for you to get compensation for that. Can you talk about whether there may be any potential flowback of economics there?

Okay. So on Canada, I guess 2 points I would make. So the team there is doing a very nice job of working through the economics and improving the fundamental performance of that business. And that's sharpening [indiscernible] all the way around. But I mean, there are a couple of things that are sort of specifically improving things.

They've been through the portfolio of contracts. And to the extent that we can reach agreement with some people who have lower value contracts, we've been able to sort of close some of those down. We've actually, again, on the flip side on the supply side, we've, as you know, closed one of our sites, and so that's sort of averaged down our own cost, right?

The second side of this is that the -- to the extent we have lower demand for fiber, then actually we can reduce it. The further out you go with the fiber, as you know, the more expensive it gets. So to the extent there's less demand, we have cheaper pellets. So all of that is contributing to a significant improvement in the operational performance.

In terms of the actual strategic review, I mean, we're looking at various different options, including a potential sale, and that process is ongoing. And I would say early days, but potentially encouraging. And frankly, the benefits of the Group. I mean, we are -- as you can see from our strategy, we're very focused on the opportunities we have in the U.K., very focused on sort of having a supply chain from the U.S. South supporting the U.K. sort of Biomass Generation.

And so being able to sort of focus more on that piece of our business long-term is absolutely part of what we're trying to get to. In terms of the system operator and spend, I guess I think what I would say is that the -- we're working very closely with both. I think that they're doing the best that they can within the constraints they have, both contractually and regulatorily to support us.

I think that the fact that the way the system is designed, that's not that easy for them to do, right? Their contractual sort of framework is not conducive to us getting either sort of having sort of strong contractual remedies to support actually their delivery doesn't also give us sort of financial remedies, as I'm sure you well know.

So -- but again, the cooperation and the willingness is strong. So we're actually working cooperatively with them, which I think is helpful. In terms of insurance, we are -- we do have business interruption insurance, and that has the potential to support things on the Cruachan side. I would say it's less relevant on the Open Cycle side.

The next question from Adam Forsyth, Longspur Research.

Two questions. Firstly, on Hirwaun, are you able to give the split of revenue between non-generation and generation of either revenue or in terms of the EBITDA? I'm trying to get a feel for how material the non-generation income is.

And then the second question, just around the route-to-market opportunity. I think I'm right you said GBP 10 million in earnings. Was that an expectation or is that actually what you've delivered this half? And where do we see that in the numbers?

Yes. So on the Open Cycles, we haven't broken that out so far, Adam. I think what I'll do, let's take that question away because I mean, I think when we get to a Capital Markets Day, for example, that's the type of thing where I think we potentially could provide more detail that it sounds like would be helpful. So we will work on that.

In terms of the route to market, the GBP 10 million I mentioned is, call it, a circa GBP 10 million number that we've been earning from the route-to-market business that we've had in place for several years. That business originally came to us through the Opus acquisition.

And it's again circa GBP 10 million. I think that's a good ballpark number for that side of the portfolio with that type of route-to-market assets, et cetera. That number appears in the [indiscernible] numbers, and it's a full year, not a half year.

Okay. And can I just ask, is that capacity related or do you get any element of price exposure?

I'm sorry, can you explain what you mean? I'm not sure I understand the question.

So are you -- is your route to market fee for each generator, is that related to the capacity they have or is it like a royalty payment from the income they're getting?

So basically, I mean, the way it works is that these smaller-scale generators will sort of come to market where they ask for a proposal, how much will you charge me in order for you to bring that power to market. So we earn a fee from them.

And the flip side of that is actually then we have to manage the actual -- the market risk associated with, for example, they had CfD pricing and bringing that to market. So it's effectively the earnings net of the cost for managing the risk.

The next question from Charles Swabey, HSBC.

I've got 2 questions. First on the pellets and focusing on the U.S. South and the pellet business there. I wonder if you could provide an update on the cost reduction program in the first half here, how you see this playing out second half and into '27 and obviously, the impact on margins.

The second one, again, just to go back to data centers and a slightly different angle. Just in terms of the conversations you mentioned you've had the government, I appreciate this sort of still in the early stages. I wonder if you could provide any insight to the government's position there. Would you say that's supportive of a large [indiscernible] meter data center attracts? Any insight would be helpful.

Yes. I think on the pellet side, I mean, really, I think it significantly fits into what Frank talked about in terms of the overall program, right, which is that we've got this program, which we call sort of future focus. It includes everything from top to bottom power station operations, pellet plant operations, internal costs, third-party costs.

And what we've been doing now for several years quite successfully in the pellet business is frankly looking for every opportunity, whether that's simple things, better procurement, for example, right? Just the simple thing that sort of optimizing operations across the piece. And for me, the way I'm thinking about it is look to take that inflation every year kind of scenario is it sort of going to be a rule of thumb.

And I did that nicely. And I mean the power station may be a little bit differently because the power station is clearly going to be running less. So the program there is designed to make sure we have the right sort of cost base relative to a smaller set of operations, right? Maybe one thing I'll just throw in here, which I think is interesting is that the system is going to be shorter in the summer with Drax Power Station operating effectively 2 full biomass units.

It's going to be shorter still if we're running at 30% capacity instead of at 60% capacity. So next year might be a tougher one for the system. In terms of government discussions, I think the -- I guess 2 things I would say. One is that we have ongoing, I would say, [ call it them ], natural day-to-day discussions with [indiscernible] as a major generator.

Those discussions are already sort of about how -- what do we think the system is going to look like in 2031, what's the role that we might play, how does data center fit into that. I think from their perspective, clearly, the investment that the data center brings is very attractive.

But at the same time, I think they recognize that the power station is very well likely to be needed for security supply well into the 30s, right? So balancing those 2 things in a very constructive way, I would say, our discussion. State discussions is a bit grand, but I would say the regular interactions we're having to sort of throw these ideas around, it would indicate that they have recognized the value in both of those things.

This was the last question. I would like to turn the conference back over to Mr. Gardiner for any closing remarks.

Well, thanks very much, guys. Really appreciate the questions. I mean I think the -- I guess the 2 things I would say. So one is that I think we've operated well safely, delivered power, 6% is much higher than what we've been doing in terms of contribution to the overall system in the first half of the year.

But much more significantly, our business is just rapidly becoming very different from what you and your investors might have remembered, right? So if I would take away one thing from this is basically we are a 6 gigawatts under management business with a broad range of technologies doing lots of different things. So I'll leave that with you.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Good morning, everyone, and thank you for joining us. Frank sends his apologies. He's not with us today due to personal medical reasons related to a cycling accident, and we expect him back shortly. So Mark Strafford, whom we all know well, and I will be hosting the call.

Our plan is that I will provide an overview of 2025 and an update on the business before handing over to Mark to take you through the numbers. I'll then come back to talk about the progress we're making on our growth strategy. And we'll finish by opening up to questions, which you can either ask verbally or submit online.

On to Page 3, please. You're all familiar with our purpose, which is to enable a zero carbon, lower-cost energy future. I'll start as I always do by reaffirming that that is our purpose, and it guides everything that we do.

In terms of our strategy, which is to create value by investing in the U.K. energy transition, we're focused on a couple of things. First, we are preparing the group for the new running regime that the new low-carbon dispatchable CfD will require. That process is well underway, and that will underpin the earnings and cash flow, which I'll talk about later that we expect to earn between now and 2031. Second part of our strategy is investing that cash to grow our U.K. power business as the energy transition continues and AI drives electrification and growth in demand. And I'll talk more specifically about the investments we're making in BESS and the progress we're making on a data center.

Finally, and most critically, our people are at the heart of Drax and their safety and well-being is an absolute priority for us. And while we've had to take some difficult but necessary steps to position our business effectively for its exciting future, it's more critical than ever at the times like this that everyone feels a valued member on a winning team with a worthwhile mission.

Turning to Page 4. We've delivered a strong operational and underlying financial performance across the group, which is underpinned by a continued focus on safe and efficient operations. We produced a record level of renewable power, primarily from the Drax Power Station, which serves to emphasize its ongoing importance. We're a major provider of renewable power in the U.K. as well as flexibility, accounting for around 6% of overall power and 11% of renewables. And in certain periods of peak demand, we have been more than 50% of U.K. renewable power generation when there has been limited levels of wind.

We've also delivered a record level of pellet production, while at the same time, reducing our costs in the U.S. South, which we see increasingly as highly integrated into our U.K. biomass generation operations. The signing of our low-carbon dispatchable CfD agreement for the Drax Power Station is a key inflection point for the group, enabling us to continue to support the U.K. system while investing for growth.

As you know, we're committed to our plans to generate free cash flows of about GBP 3 billion between 2025 and 2031, of which we delivered about GBP 0.5 billion last year. And to be clear, this is from the current business before accounting for new cash flows associated with our growth plans. Of that GBP 3 billion, we expect to initially allocate over GBP 1 billion of free cash flow to shareholder returns. which is inclusive of the ongoing GBP 450 million 3-year share buyback program. And up to about GBP 2 billion of that then will be allocated to incremental investment in growth as we seek to enable the energy transition and support the growth of AI.

And we're making great progress. First, at the Drax Power Station, we're developing plans for as much as 1 gigawatt or more of data center capacity, while at the same time, continuing to provide energy security for the U.K. Secondly, in our FlexGen business, we're developing a gigawatt scale BESS pipeline. And you will have seen that in the last 6 months, we have purchased or made agreements, which will give us operational control of over 700 megawatts of batteries across 5 different sites. We've also acquired a new optimization platform and one of the leading players in that space, Flexitricity. And third, we're continuing to assess further investment in flexible renewable energy, about which we would provide further updates later in the year. And finally and critically, we remain very much committed to disciplined capital allocation and delivering attractive returns for our shareholders.

Turning to Page 5. So sustainability remains at the heart of what we do. And we've made excellent progress this year and have started to see that reflected in third-party ratings and accreditations. Of particular note, we received 2 A ratings for our CDP disclosures on climate and forestry. Only 4% of the 22,000 companies making CDP disclosures receive an A rating and even less received 2, which we believe demonstrates our commitment clearly to sustainability and, importantly, also to transparency. We are also A rated by MSCI.

And in addition to that, during the course of the year, we undertook a significant number of new initiatives, including a new sustainability framework, our climate transition plan, and we continue to progress our reporting and alignment with both TCFD and TNFD as well as SBTi, which has recently validated our targets going out to 2040.

And finally, in January, we launched a public tracking tool, our biomass tracker, which shows the provenance of our biomass supply chain, and I would encourage you all to have a look at that.

Moving on to Page 6. I just want to reiterate, as we said at the beginning of last year that we have a target to deliver post 2027 adjusted EBITDA of GBP 600 million to GBP 700 million per annum across the combined pellet production, biomass generation and FlexGen and as we said before accounting for development expense. We're very much committed to that target, but as a reflection of the continued development of the U.K. power system, shifts in the Canadian pellet business and increasing value from the flexible generation, we now expect the FlexGen business to comprise a greater proportion of that mix over time.

And if you take those targets, together with the strong contracted cash flows that we have up until 2027, we believe we will deliver free cash flow of about $3 billion between 2025 and 2031. And delivering this plan supports our options for growth and enhanced value creation. And my plan now is to go through each of the different parts of the business and explain how we are doing.

On to Page 7. FlexGen, I'll start with pumped storage and hydro. So that portfolio has performed extremely well since we purchased it in 2018. And as a reminder, Cruachan represents about 1/3 of the total megawatt hours of long-duration storage in the U.K. It can run for up to 16 hours at full load and has the equivalent of over 7 gigawatt hours of stored energy. Under our ownership, Cruachan has seen an increase in its operating activity over the last 6 years from 20% to 60%, which reflects both its role in our portfolio and the growing need for system support across the U.K.

The strong performance of these assets has provided an exceptionally good return on investment and a 5-year payback. And reflecting the value we see in these assets, we're investing in an ongoing upgrade at Cruachan to replace 2 of the 4 turbines with new larger machines. This is a major program of work for the team and an investment of GBP 80 million in U.K. energy security that's going to take place between 2025 and 2027. As you know, Units 3 and 4 of Cruachan are currently unavailable due to a grid connection failure in late December caused by assets owned by the Scottish network operator, SSEN. We're working with them to restore the connection, and they will provide a timetable for that repair shortly. We're taking advantage of that downtime to progress planned outage work on Unit 3 for minimizing the overall impact.

Second piece of this business, the open cycles. We expect to take commercial control of the first of those shortly with the unit already receiving capacity market payments. The second and third sites are expected to commence commissioning in 2026. The earnings of the open cycles are underpinned by around GBP 270 million of capacity market payments, complemented by system support services, peak power generation and a low operating cost base. And again, we expect to retain these assets as a part of our FlexGen portfolio.

The third piece, which we're getting increasingly excited about as demand side response becomes a more important piece of the puzzle, is the energy solutions business. So in addition to power sales to industrial customers, we're also an enabler of more renewables on the system as we provide a route to market for 2,000 embedded generators. Across our customer book, we offer demand side response, whereby we can reduce load to industrial customers at certain periods of high demand, creating value for our customers as well as for Drax. It's also of note that we had significant experience enabling customers to purchase power through both the wholesale market and through PPAs.

Turning to Page 8 and the low-carbon dispatchable CfD. So the signing of a CfD for post 2027 is a key inflection point for our group and a significant endorsement of the contribution that biomass makes towards energy security as well as decarbonization and value for money, saving bill payers billions over the term of the agreement. Under the terms of the agreement, we will sell the equivalent of 6 terawatt hours per year or about 30% of the load of those units.

The structure of the agreement allows us to constantly reprofile generation to the periods of greatest need and highest value. So in periods of high demand, we would expect to use all 4 units to produce and sell as much power as possible at the highest prices. And in periods of low demand, we'll add value by buying back forward sold baseload power at lower prices. And by operating this way, we support energy security, provide flexibility to the power system and earn a higher average price for our power.

The agreement also includes the continued evolution of sustainability standards and a further reduction in supply chain emissions limits. We're very comfortable with that and supportive of those measures. As a reminder, we expect to use around 2 million tonnes of our own pellets from our operation in the U.S. South. Again, a further reminder, we've hedged all of the FX requirements associated with the deal as we have our logistics requirements for our own pellets, and we are progressing agreements to finalize biomass and logistics hedging from third parties.

So the third piece, turning to Page 9, our sustainable biomass business. So this is a bit new. We're increasingly looking at our pellet business in a new way. Our U.K. business is fundamentally part of our U.K. supply chain. That business is doing very well with its current level of value supported by existing contractual arrangements. As you will have seen, our Canadian business is more challenged, and we've been talking about this for some time as margins have come down due to fiber costs rising in Canada more rapidly than indexed power prices in Asia.

As we noted last year, this dynamic contributed to the decision we've made to close one of our pellet plants in Williams Lake towards the end of last year. So against this backdrop, we're not currently expecting to commit any more capital to this segment, and we are -- that includes the paused Longview project. Now overall, in the pellet market, while the market dynamics we expect to be challenging through the 2020s, as a company or as a group, we're largely insulated from that by the contracted nature of our book. Now if anything, we'll look to benefit from lower market pricing by accessing the spot market by pellets at attractive prices for Drax Power Station. And longer term, we continue to see opportunities for biomass to play a key role in energy transition and our Elimini business gives us an important capability and brand to continue exploring those opportunities in SAF, BESS and other areas. But again, as you will have seen, reflecting the current market environment, which we've seen for some time now and been talking about, we are reviewing strategic options for that Canadian business.

And with that, I will hand it over to Mark.

Thank you, Will, and good morning, everyone. I'll now take you through Frank's section of the presentation, starting on Page 10. We see tremendous value for the group in the delivery of our purpose and strategy through which we are supporting energy security, creating solutions for the energy transition in the U.K. and enabling AI growth. Unlocking that opportunity is a strategic puzzle, which the team are working through and, in doing so, creating value for shareholders and other stakeholders alike.

We have a very strong business today with a strong balance sheet, and we are generating strong cash flows, which can support value-accretive growth and returns to shareholders. But we must operate well and safely and execute our plans diligently to realize this.

Moving on to the financial summary on Page 11. Operationally, we performed well in 2025, generating GBP 947 million of adjusted EBITDA. This reflected a particularly strong December, where market conditions allowed us to generate additional volumes, leading to a record year for biomass power production, which totaled 15 terawatt hours. Adjusted earnings per share of 137.7p was an increase of 7% on 2024 and reflects the reduction in EBITDA, offset by the ongoing share buyback program and a lower net finance cost.

Strong cash generation meant that net debt of GBP 784 million was 0.8x 2025 EBITDA. This is significantly below our long-term target of around 2x. Total cash and committed facilities was GBP 942 million, a strong position, which supports our plans for growth across the group. Our expected full year dividend of 29p per share is an 11.5% increase on 2024 and reflects the confidence we have in the business.

We are committed to value and are pursuing this through disciplined capital allocation decisions. During 2025, we completed a GBP 300 million share buyback and commenced a further GBP 450 million program. So the 24th of February, we have purchased GBP 57 million of shares under the new program.

Moving on to EBITDA by business unit on Page 12. I'll now take the performance of each business unit in turn, starting with pellet production and biomass generation, which, as Will mentioned, we see as increasingly interlinked through the vertical integration between our operations in the U.S. South and Drax Power Station. Pellet production's EBITDA reduced from GBP 143 million in 2024 to GBP 129 million in 2025. Let me explain this movement. Volumes produced increased in 2025 to 4.2 million tonnes, which is a new record. We also showed progress on cost reductions, reducing the cost per tonne of biomass produced. For internal sales, the reduction in cost is then passed through to the generation business at a lower cost of biomass as part of a well-established cost-plus transfer pricing methodology.

To be clear, this is a positive outcome for the group. And if the price had remained at 2024 levels, pellet production EBITDA would have been over GBP 150 million in 2025. This is the rationale for why we see U.S. pellet operations and Drax Power Station as increasingly integrated. And accordingly, we are considering adjusting our reporting going forward to reflect this.

Outside of EBITDA, against the backdrop of an expected softening in the global pellet market post 2027 and a constrained fiber supply in British Columbia and Alberta, we have reduced our expectations for the Canadian business and recognized a charge of GBP 198 million. We have also paused our development project at Longview in Washington State and have taken the decision to impair this asset with a charge of GBP 139 million. We retain the land and the option to progress this opportunity at a later date if market conditions become attractive.

Moving on to biomass generation, which had another strong year. Despite an expected decrease in achieved power prices, the business produced record volumes of generation and had a particularly strong year-end, capturing value from meeting higher winter demand. As I mentioned, the business also benefited from cost reductions in the U.S. South and therefore, lower prices of internal pellet supply as well as a reduction in the electricity generator levy. This reinforces our view that Drax Power Station is a vital source of reliable renewable generation and energy security, both now and in the future.

Below the line, reflecting the lack of progress in development of appropriate commercial and regulatory support for carbon removals in the U.K., we have booked an impairment of GBP 48 million in relation to BECCS at Drax Power Station. However, we continue to believe that carbon removals at scale remain vital for the U.K. to deliver its commitment to net zero by 2050. As such, we retain the option for future development, minimizing cost and maximizing optionality so that we could proceed if the opportunity develops.

Moving on to FlexGen. Cruachan continued to perform well in 2025 and after adjusting for planned outages, maintained a high utilization rate, which is well above historic averages. EBITDA reduced from the previous year as planned outage works, including the Unit 3 and 4 upgrade program, progress.

In energy solutions, our I&C business performed well, maintaining a broadly consistent margin on a smaller revenue base against the backdrop of lower power prices. The windup of Opus Energy is now largely complete with a small residual loss in 2025.

Moving on to development expenditure. Elimini spend has reduced as we have been disciplined in allocating capital to that business against the market backdrop that does not currently support significant investment in carbon removals. Other DevEx, which includes a component of uncapitalized OCGT cost, is broadly flat.

Turning to Page 13 and the balance sheet. Our balance sheet remains strong. During 2025, we repaid over GBP 230 million of debt, extended facilities and secured a new term loan. Our year-end cash and committed facilities position was strong. At 0.8x levered, we have significant headroom to fund our plans for growth through the investment cycle.

Moving on to Page 14 and capital investment. We have continued to invest in growth and in our core business, including the OCGTs, our first battery acquisitions and the upgrade project at Cruachan. In addition to the acquisition of the Apatura battery project and Flexitricity, we have committed GBP 300 million to battery tolling agreements, which Will cover later in the presentation. These themes continue through 2026 as we commission the OCGTs and the enhancement work on Cruachan. Of the growth CapEx in 2026, we expect over half will be on batteries.

Lastly, we will continue to invest in the maintenance of our asset base to deliver good operational availability and safe and efficient operations. We expect an increase in maintenance CapEx in 2026 to reflect a major planned outage on one biomass unit at Drage Power Station.

Moving on to Page 15 and cost management. Our post 2027 EBITDA target requires us to be disciplined on costs, and we are making good progress towards putting in place the structures and cost base to allow us to succeed and deliver long-term value to stakeholders. Our targets are eminently achievable, and we are progressively taking actions to deliver significant cost reductions. By 2027, we expect to establish structural savings of over GBP 150 million per year compared to a 2024 base year.

You are aware of several areas of efficiency already, including a reduction in output from Drax Power Station post 2027, which will drive a lower cost base, an appropriately sized corporate and core services structure and a focused external supplier cost reduction program. But to reiterate, these savings are already reflected in the GBP 600 million to GBP 700 million post 2027 EBITDA target and are not additional to that.

Turning to Page 16 and capital allocation. Our capital allocation policy, which remains unchanged, is at the heart of the financial decisions we make and supports our focus on value creation and opportunities for growth. Our balance sheet is strong, and we remain committed to a long-term target of around 2x net debt to adjusted EBITDA. We will continue to invest judiciously in the core business to deliver safe and efficient operations and options for growth in flexible renewable energy.

Since 2017, the dividend per share has grown on average by 11% per annum, including the expected 11.5% increase in 2025. Income returns to shareholders are an important part of our investment case, and we remain firmly committed to our policy to pay a sustainable and growing dividend.

And lastly, to the extent there is a surplus of capital beyond our investment requirements, we will consider the best way to return this to shareholders. We see buybacks as an investment which we can make in the business to create value for shareholders alongside opportunities for growth.

And with that, I'll hand back to Will.

Thank you very much, Mark. Turning to Page 17. I'm not going to provide a wider strategy update here, but plan to do that later in the year. For today, I want to focus on the areas we're making the most progress in, Drax Power Station and batteries. Turning to Page 18. And before I get into the whole question of growth, let me share with you how we're preparing the company to run under the new CFD mechanism. We're putting in place the financial and operational structures, systems and performance culture, which will allow the company to succeed, and we call this program Future Focus.

As a part of this, we recently announced a consultation process for the U.K., and we've announced changes to our North American businesses, which could see a reduction of 350-plus roles across the group. We have conviction that this is the right thing to do for the business, and we will complete the process in a respectful and considerate way as quickly as possible.

So moving on to the Drax Power Station on Page 19. We believe that the size, flexibility and location of Drax Power Station making an important long-term part of the U.K. energy system, and we are focused on options to maximize value from the site. Options for a data center are a priority. But we could also utilize the site for multiple generation technologies, new system support services and, in the longer term, we're still excited about carbon removal.

So on Page 20, let me talk a bit more about options for a data center. The site, which is located centrally in the U.K. and next to one of the country's largest substations, comprises over 1,000 acres and has 4 gigawatts of grid access, of which 2.6 gigawatts are flexible renewable generation. We also have cooling systems on a secure site with proximity to the U.K. fiber optic cable network. And this makes it ideal for the development of a data center. So we're discussing the potential for a data center with a developer. We don't have more details to share at this stage, but we'll update the market as soon as we do.

What I can say is that we envisage development of the site in 3 phases. The first is for around 100 megawatts, utilizing existing infrastructure and transformers to import power directly from the grid, and we expect to submit a planning application shortly. The second and third phases are behind the meter. The second phase aims to utilize 500 megawatts of capacity before 2031. And since this is during the period under which the station is operating under the CfD, that development will be subject to agreement with the U.K. government. And the third phase would follow from 2031 onwards and add further 600 megawatts of capacity or more.

So again, we believe that Drax Power Station is uniquely placed to do this in the U.K. and that the development could represent a multibillion-dollar foreign investment opportunity for the U.K., creating thousands of jobs while continuing to support energy security through the period of 2031 and beyond. And quite importantly, we have a very talented workforce who are experts in U.K. power in planning and in consenting.

Turning to batteries on Page 21. I wanted to share some thoughts on the rationale for that market and why we're excited about it, how we see the market developing and the progress that we've made so far. NESO's future energy scenarios show power demand is likely to double in the U.K. over the next 25 years due to the electrification of heat, transport as well as new industrial demands like data centers. At the same time, intermittent renewables like offshore wind are expected to triple and flexibility will continue to fall, largely reflecting the removal of gas in the system. So as a result, there's likely to be either too little or too much power on the system at any one point in time.

To help manage this, NESO's analysis suggests a requirement for over 30 gigawatts of BESS by 2030 compared to 7 gigawatts today. As you know, BESS can respond very quickly, capturing higher prices when available and then storing the power when the demand is low. BESS also nicely complements our existing portfolio, having super-fast response and short duration storage for our existing portfolio, meaning we are well placed to maximize value no matter what the needs are of the system. But again, having the right assets in the right location at the right time will be critical to success as well having the tools to manage that portfolio effectively.

So what are we doing about it? If we look at Page 22, reflecting this demand, we're developing a gigawatt scale pipeline of BEV opportunities. And we're doing that in 2 ways. First, we're investing in the ownership of physical assets where we believe the locations are optimal and there are opportunities to invest in the sites in the long term. Secondly, many BESS assets will be developed by infrastructure funds who are looking to secure cash flows through floors and tolls. And that provides us with additional opportunities to access the BESS market and use our deep expertise in trading Flex assets. We believe that by acquiring development projects and tolling agreements with existing grid connections, we can benefit from a shorter time to power and at the same time, reduce our exposure to development risk.

In addition, the recent acquisition of Flexitricity bolsters our ability to provide our own assets as well as third-party owners with best-in-class optimization services. Flexitricity's platform, combined with Drax's 24/7 trading capability, underpins our ability to maximize returns for flexible assets, both in front of and behind the meter. So again, we're making good progress. We've committed on the order of GBP 0.5 billion with a control of over 700 megawatts of capacity in addition to the acquisition of Flexitricity.

Let me give you a little bit more detail on our progress. Turning to Page 23. In October of last year, we acquired 3 development projects for 260 megawatts under an agreement with the developer Apatura. It's a fixed price deal that's structured such that we have protection in the event of cost overruns. Two of the sites are located in the key England, Scotland transmission constraint corridor and a third is in East Yorkshire near the Drax Power Station. This deal also gives us option rights over an additional 289 megawatts of capacity.

In addition to that, on Page 24, so in addition to physical ownership, we've entered into tolling agreements for 450 megawatts with the developers of Fidra and Zenobe. This model complements physical ownership, but differs in that there is no cash outlay or ongoing maintenance costs. We'll pay a tolling fee in return for which the developer is responsible for building, maintaining and making the asset available. We, on the other hand, have full operational control and keep all revenues from operation other than capacity payments and, for Zenobe, certain other immaterial ancillary revenues. And we expect this model to work well for both parties.

The asset owner gets a predictable revenue stream, and we can access the value which we see from the energy market dynamics that I described previously, but with no capital outlay and a shorter time to power. And both of these projects are targeting FID this year.

For the third leg of this approach on Page 25, was in January, we agreed a deal to acquire the asset optimization platform, which is Flexitricity for about GBP 36 million. Flexitricity provides front of and behind-the-meter solutions to third parties with a customer base of over 900 megawatts across a large number of sites, including Air Products and Severn Trent. The technology is an important component of managing the enlarged FlexGen business and the gigawatt scale BESS portfolio, which we are developing. If we didn't have this capability, we would have had to outsource it. But by retaining it within the group, we keep the IP and value associated with an end-to-end trading and optimization capability, and we expect the transaction to complete in March.

Turning to Page 27. Our primary investment opportunities are currently in the U.K., where we are a leading provider of flexible renewable energy. Our expertise operating FlexGen and 24/7 operations makes us a good owner of these assets, and we believe we can create additional value through growing the portfolio. During this year and through 2028, we will start to add additional capacity from OCGTs and from BESS, providing a range of technologies, durations and dispatch feeds, which will enhance our capabilities. We also have options over additional BESS developments as well as the grid access we have at Drax Power Station.

In addition to which we expect to have close to 2 gigawatts of route-to-market services for over 2,000 small renewable assets as well as grid scale assets by Drax Energy Solutions and Flexitricity. In total, 8 gigawatts of capacity we own, we toll or provide other route-to-market services for. So importantly, to wrap that all together, while the earnings from Drax Power Station will reduce next year with the new CfD, we are expecting to grow earnings in our FlexGen business and overall as a group as we bring these new generating assets on stream through the rest of the decade.

Finally, on Page 28. So let me bring it all together. First, we have performed well again in 2025. And Drax is already a leading provider of flexible renewable generation in the U.K., as I have described. We see a great opportunity to grow that position. The first key underpin is the low-carbon CfD and the new operating regime that we are creating. The second one is we've already begun our investment program, as I've described, and look forward to growing our business through the rest of the decade and creating value by investing in the U.K. energy transition. We will be disciplined about how we approach these opportunities in line with our existing capital allocation policy, and we will be very focused on creating value and delivering excellent returns to shareholders.

With that, I'll hand it back to the operator, and we are ready to take any questions that you may have.

[Operator Instructions] Our first question comes from the line of Alex Wheeler from RBC.

Two questions from me, please. Firstly, on the impairment in the Canadian pellets. Should we think about this as formalizing the messaging you've already given? Or is there an implication here that you think things are getting worse? Then if you could also give some color on the strategic options for that business, that would be great.

And then secondly, just on the guidance, just interested in why you've not included the BESS assets within the current medium-term guidance and when you think you'll consider formally adding those?

Great. Thank you, Alex. So in terms of the impairment, I think you described it well. We have been, I think, communicating over the last sort of probably 6 quarters, the weakness that we see in the Canadian market. It's really a long-term sort of structural issue related to the nature of our contracts and the shrinking fiber supply becoming more competitive and not driving up the cost of our inputs, right? So it's absolutely not -- it's not an indication that things are getting worse. It's just really a sort of formalization, I think, of where we have been, right?

So -- and again, for the avoidance of doubt, the GBP 600 million to GBP 700 million that we've been talking about for some time, very much takes into account where we think the Canadian pellet business is and has been and will be.

In terms of strategic options, I mean, we're working with our suppliers to sort of manage our costs as best we can. We're working with our customers, again, to manage the contracts as best we can to drive increased profitability. We have had to shut the Williams Lake facility. We will look at the best way to optimize where we're supplying pellets from relative to where they're going. So that's another piece of that puzzle. And again, disposal of the asset would also be an option we will explore.

In terms of BESS, I mean the GBP 600 million to GBP 700 million, as we've said, is before those investments. And frankly, what we're planning to do is come back to the market sometime later in the year and sort of talk more completely about how the overall strategy fits together. And I think at that time, we would probably look to update our views of where we think numbers will be as we go through the rest of the decade.

Our next question comes from the line of Pavan Mahbubani from JPMorgan.

I have 2, please. Firstly, on the EUR 3 billion of cash flow and the uses, you talk about EUR 2 billion of investments and you've given us visibility on batteries. Can you give a bit more flavor or color as to where you see the rest of that capital deployed? Do you see it all as going into batteries? Are you looking at gas or maybe some other investments? Would be great to hear how you're thinking high level about where this money is going to go if it all gets deployed?

And my second question is, Will, on the confidence you have in the phasing of the data center opportunity as you laid it out in your slides, is this based on what you think your capacity is? Or is it based on the conversations you're actually having? I would appreciate any color around that as well. Those are my questions.

Thanks, Pavan. So first, in terms of the allocation of capital, I think -- so again, to make sure it's clear, GBP 3 billion is what we expect to generate. Again, that includes '25. So that's sort of over the next -- last year plus the next 4. The uses of that, I think, again, we talked about GBP 1 billion or GBP 1 billion plus that goes back to shareholders. Again, that should be pretty transparent in what we've already described. And then the GBP 2 billion. So I think at this point in time, we've already allocated about GBP 0.5 billion to batteries as we've described.

One of the things that give me a little bit of caution about investing a lot more in that now is that we haven't really seen the results of that investment yet. I mean those earnings will come on stream probably '27, '28, '29. So we need to watch how that develops to some extent. Although, again, we are excited about that market, and I could see plus or minus up to GBP 1 billion potentially of the GBP 2 billion moving into that space. I would call that a hard target. That's something that, again, we'll come back and sort of later in the year, give you more color.

But the other area, I think, which is -- before I get to the other area, the other thing that's interesting is that the data center, we would expect largely to be a source of capital, i.e., the type of deal we would look to be doing is one where we would be selling the powered land and then providing a PPA to the end customer. We will be making some investment in that space as we get to the bigger pieces of it, and I'll come back to that in a second, but again, largely a source of capital. And so -- but again, other things we'd be looking at, I mean, we are still very much committed to our purpose, as we said, enabling a lower cost zero carbon energy future. Again, I think that ports probably more in the direction of more renewables, although I wouldn't rule out gas, as you know, we've got the open cycles, but more intermittent renewables is the area that I think we're exploring at the moment.

And I guess, how do I see that? -- really, it needs to be -- well, the first thing I would say is it's very much consistent with our core business, right? We are a flexible renewable generator in the U.K. To add intermittent renewals to that portfolio would be a very logical extension of where we are today, right? It's the same trading environment, same regulatory environment, same grid environment, all of those things are very much part of our core competencies, right?

Second thing is though, it would need to really meet a sort of set of criteria that we are working through now. So it clearly has to be -- the returns have to be attractive. And I think it's actually -- there is more potential for that than there would have been, let's say, 5 years ago when a lot of these assets were being built. It's likely to be at least in the initial piece through acquisition, something that's generating cash probably more interesting in the first instance than just a development asset. We have to be convinced, and I think we're getting convinced that there's interesting sort of commercial and industrial logic, i.e., the potential to create attractive products for customers.

The third piece, which I think is one of the more interesting ones is that as we grow the FlexGen portfolio and given the characteristics of the bridge, our in-year earnings, we would expect to become more volatile. We're very much -- we're excited about the growth and volatility. But again, it does make our in-year earnings potentially more volatile and not as hedgeable as they would have been in the past, right? Adding longer-term contracted earnings, let's say, through intermittent renewables is quite an interesting sort of counterbalance to that. And that's one of the things that we think is quite an interesting thing to look at. So again, we're looking at those intermittent renewables. We haven't made any decisions. And again, we'll probably come back and make sure that we make a clear case for that as we look at it further.

On the data center, I think -- I mean, I've highlighted sort of 3 different phases for a couple of important reasons. So the first one is that we think that our ability to use 100 megawatts of in-feed to the Drax Power station quite quickly is differentiating. There aren't many ways that you can build a data center, potentially be online next year without -- not many people have that 100 megawatts available. So that's one of the reasons we described that.

Second reason we talk about the 500 is that very explicitly in our dispatchable CfD agreement with the government, we have effectively -- they've agreed that they will discuss with us. If we can -- and if we meet certain criteria, they would be very much open to us using that 500 megawatts for a data center. So that's the reason we discussed that.

And then the third piece is, ultimately, we think we have enough biomass behind-the-meter generating capacity to do something in excess of 1 gigawatt. And the final point is the logic for that is both a function of what we think makes sense and a function of what we are discussing. One thing I want to be very clear, it would not be very -- I would much -- I would be very disappointed if we ended up with 100 megawatts and not more, right? So that's very much part of the thinking.

Our next question comes from the line of Dominic Nash with Barclays.

A couple of questions from me as well, please. I think the first one might have a couple of more parts in it, and it's following up from sort of the data center angle. On the first 100 megawatts, will you have the ability to switch that to behind the meter at a later date? Or will that permanently be in front of the meter?

And secondly, on the economics of this, clearly, if you're in front of the meter that you've got no real competitive advantage, I presume, except the speed, which you mentioned. But when we then go to behind the meter, you've clearly got quite a high marginal cost of biomass. How are your conversations going with potential offtakers or what your thoughts are on, a, their desire to source power from biomass; and b, your relative economic position from behind the meter with biomass versus behind the meter from OCGTs? And of course, the follow-on question from that is, could you also provide gas from the Drax turbines at some point post 2031 or before?

And the second question is on the biomass part, you're moving from 7 million tonnes of consumption to 3 million tonnes. I think more than 2 million tonnes are going to be from yourself. You're saying you're contracting with third parties. Can you just tell us what sort of scale and when do we expect to get the news flow on who you're going to contract from? And the follow-on question from here is that do you not think there's a bit of a risk if you end up contracting too much of your feedstock from the United States alone, particularly in light of a very sort of capricious trade issues between the U.S. and everyone else and whether or not you should have some sort of diversification for your biomass sourcing.

Okay. I think there's probably about 7, Dominic, if I count them back. Thank you for the questions. I'm more than happy to respond, just kidding. So on the data center, the first one, I think, was could we switch to behind the meter later. And I would say, again, it's all -- we don't have a sort of negotiated deal. So that's obviously something we have to get to as we go. But I guess the key thing to think about from our perspective is that if you only have 100 megawatts of generation that's behind the meter, you don't have enough to effectively support a full unit at the full power station. So we will need to structure it in such a way that actually it manages that risk, right?

Secondly, the economics, I think you've absolutely landed on it in the sense that the behind-the-meter cost of biomass power is well below the front of the meter power cost. So we're clearly highly competitive relative to something that you get off the transmission network. But clearly, again, someone who's got behind-the-meter gas would be more sort of competitive than we are, right?

Now getting behind-the-meter gas and having that online between now and the rest of the end of the decade is not that straightforward. So again, we think we have advantages there. So again, all of this is something that we are and have been discussing with counterparties. And so again, the proof will be in the pudding. So when we come back and say, if and when we've got something done, I think that's probably the best way to answer that part of the question.

Could we do gas? Again, as you well know, Dominic, we had a plan to do a repowering with gas at one point in time. I guess what I would say is that that's -- it's not a trivial activity. And basically, it's a new power station or a massive refurb it's a big activity. So it's not something that we could do, but we would have to consider that as effectively a new investment. And frankly, with 2.5 gigawatts of capacity available, I think that's definitely our first port of call.

Just to be clear, the 2 million tonnes we have is effectively the capacity we have in the South. So we will be using all of those pellets. 7 million was a target. We never got to that. So the northern pellets again is about 2 million, and that's what the numbers are currently. Using another 1 million tonnes is something we're doing because of a combination of diversification. So yes, we clearly want to make sure we manage the geographical risk as we'll do that. Clearly, we want to manage price risk, so we want to make sure we can track that in the best possible way. And that's why as soon as we have something that is enunciable, we will do so. So that's all I will be saying at the moment.

Again, it makes sense. I may have missed something, Dominic, I'm happy to come back if I have.

Our next question comes from the line of Mark Freshney with UBS.

Thanks for your presentation, but to summarize, half your pelletization capacity is in Canada. It's uneconomic. You can't source the fiber. You're looking at shutting it down because it's high cost and it will be squeezed out in the impending pellet oversupply as subsidies are cut. That seems to be the synopsis of what you're saying. So it's of that 2 million tonnes that you may shut down, what would be the additional impairments and onetime costs of shutting it down?

Just secondly, on the cost-out plan, I think the 150, the existing one, mainly centered around Yorkshire. I think you only took a GBP 9.4 million charge below the line. So what would be additional -- are there any additional charges next year and the year after? And would they appear in the middle column or the left column?

And my final question --

What are you referring to the second thing, Mark, I don't understand.

The GBP 9.4 million charge for the cost reduction. So exceptional costs -- are there any additional such costs to come through? Or are you booking it in the middle line or in underlying, so it's within the EUR 600 million to EUR 700 million EBIT? And finally, just on the cabling issue with SPN, is there any compensation that you could get to the extent that you're not an outage?

Thank you for your questions, Mark. I guess first thing I would say is that the Canadian pellet business is effectively in the same position it has been for some time. So I'm not sure there's much new news there. I mean we're not -- I think you are saying that we're going to shut it down. We're not saying we're going to shut it down. So I think we should be careful in the way you characterize it. We are looking at various different options for how we manage that well. We have contracts with customers, which we intend to deliver on. And so that's quite important, right?

So just to make sure everyone else on the call understands what's happening here. We have contracts through the 2030s with customers in Japan, some in Korea, and we fully expect to deliver on those contracts. So we are not saying by any means that we are closing the Canadian business, right? And the value that remains there, we believe, is well underpinned by the assets that we have, right? So that's the first thing I'd say.

Second thing is we have taken, as you mentioned, a part of that impairment or part of the exceptional charge associated with the Future Focus program, and that is what we're doing for now, and that's all there is there.

And in terms of SPN, I mean, the key thing we're doing now is we're making sure we work closely with them to get those assets back online. That's our focus.

Our next question comes from the line of Harrison Williams with Morgan Stanley.

A couple from me. Firstly, coming back on the pellet division. You previously provided quite a useful EBITDA margin target of around GBP 50 per tonne, appreciating. Clearly, there's been some deterioration. Can you provide an update to that margin target now?

The second question I had was on batteries. Clearly, quite an attractive investment opportunity as things currently stand in the U.K. market. But can I ask how you are thinking about maybe the risk of cannibalization as we think a few years out if we really do see as much battery capacity added to the grid as some of these forecasters expect?

And then finally, can I just get one clarification. You mentioned the GBP 150 million cost saving plan is included in the medium-term guidance of GBP 600 million to GBP 700 million in EBITDA. Could you just confirm that was always the case, i.e., when you provided that medium-term guidance on EBITDA a few years ago?

So maybe, yes, it was always the case. On batteries cannibalization, I mean, we see batteries as an attractive participant in the wholesale market and the balancing market. So it effectively still will be a small piece of the overall market. So we think that that's -- there's lots of room for those to sort of deliver good value over time.

And in terms of pellets, I think what we've been talking about for some time now is the 600 to 700 combination of pellets, biomass generation and FlexGen, and that's very much in line with where we've been. And again, there's no new news in Canada other than the impairments. And so that's consistent with where we've been for some time.

I was just going to add, Harry, I mean, that GBP 50 target that you mentioned there, I mean, that is well underpinned by operations in the U.S. South, that business is in a good place. And the point we're making today is that lower EBITDA in U.S. pellets maps across the higher EBITDA in generation. It's just where that value sits. Fundamentally reducing the cost of biomass is a good thing for the business. So that value, that target is captured within the U.S. business and Drax Power Station. Of course, Canada more challenged.

Our next question comes from the line of Adam Forsyth with Longspur Research.

Just a couple of quick questions on the BESS opportunity. Do you see an ideal split between tolling and outright ownership? Or is that something that's really just likely to be driven by the opportunities that come up in the market? The last tolling deal you did for our non-escalating, is that the sort of agreement you would like to be seeing going forward or even into longer durations? And just on that longer duration opportunity, I mean, if we start to get a lot of assets coming -- being delivered through the cap and floor mechanism, do you see any opportunities for you there, either in maybe buying post-development assets? Or even perhaps I'm not sure if tooling really makes sense with cap and floor, but maybe it does. Is that something you've had to look at?

Thanks, Adam. Can you tell me what was the second part of your question?

The second one, just about the last tolling deal for ours and non-escalating. Is that the typical sort of deal you would like to be seeing going forward?

Yes. I mean I think having a mix of durations, Adam, is quite attractive, having that 2-hour and also 4-hour in the portfolio in addition to the longer duration storage we have at Cruachan. So having a mix of technologies and durations, I think, is helpful in terms of how we operate the portfolio. And in terms of the duration of the tolling agreements, 10 to 15 years, I mean, I think every deal is going to be slightly different, but something in that sort of range is something we're comfortable with.

And I think in the first part of your question, Adam, if you think about the sort of differences between them, I mean, clearly, there's a different risk profile, right? So with the tolling agreement, we're not taking the development risk, i.e., we only have the obligations and get paid when they start operating, not taking the operating maintenance risk and then we get attractive returns. And so I think what we're doing for now as we build the portfolio, we will look at the relative returns and the relative risk on a case-by-case basis and see which we want and think are more attractive. But we think that there's value in having sort of both of them, but we haven't set a sort of explicit target as to how much we want to have of each in the portfolio.

In terms of the cap and floor, I mean, I think my guess is that the cap and floor probably sort of makes a tolling or floor arrangement sort of less interesting because the government is effectively providing a lot of that for you already. And currently, we're focused much more -- we're actually focusing more on things that are actually on a merchant basis and, frankly, we're providing a lot of sort of stability in the earnings that maybe a cap and floor would otherwise provide.

Our next question comes from the line of Charles Swabey from HSBC.

Three for me. Just on -- back to battery storage, would you consider a move into markets outside of the U.K. for BESS to diversify some of the price risk there as you get more comfortable with the technology?

Two, on data centers, when you're thinking about the pool of developers that are interested in using Drax Power Station, how has that changed over the last year in terms of the number of interested parties and the type and what they're looking to actually use the site for?

And then three, with the dispatchable CfD in place, could you give any insight if there are any discussions with governments already about sort of plans for DPS post 2031?

Okay. I got that. So in terms of moving outside the U.K., I would say we are very much focused on the U.K. for now, Charles. And I think that's quite an important piece of what we're trying to do here is extend our sort of -- extend our generating technologies, but sort of consistent with maintaining that within a market regulatory and framework that we're quite interested in. I would say that the strategy is very much a sort of M&A sort of given one, right? So if there was something that was super attractive and largely U.K. or vast majority of U.K. but had some other pieces outside, we might look at that. But the focus is very much on the U.K.

In terms of parties, I mean, I think we've been quite clear we're working with a developer, and they've been talking to multiple parties. And I would say that, that group of parties, obviously, there are sort of people come in, people go out. But I guess I wouldn't say that there's a sort of a trend in the way that that's moved over time. I think there's still quite a few people that they are talking to.

And then in terms of the dispatchable CfD, I mean, we're in very close contact with the government on this all the time. We're very focused right now on getting ready for the first part of the one we've got, right? So we haven't started any explicit discussions post '31. And frankly, we're also -- we need to talk to them first, I would say, about the data center carve-out. So that's probably the next item on our agenda with government.

Our next question comes from the line of Mark [indiscernible] with Citi.

I've got one slightly around the edges for Drax, I suppose. But on the U.K. capacity market auction, the upcoming ones, can we get your views on how you think that will go? I mean we saw there's a lower capacity target requirement, potential greater headroom there. And if I look at your slide, I think your illustrative 60 kilowatt expansion [indiscernible] per kilowatt on that. Have your views -- or what are your views on how that might go in the next couple of weeks, please?

I'm afraid I'm going to be deeply unhelpful. I mean, I guess maybe the best way to think about it is we will be putting a series of our assets that are price takers into that market. Effectively, we don't have any new significant projects we're putting in. So I haven't spent a lot of time sort of focused on where we think that will come out. And I think probably better for me not to give a forecast.

And I was just going to add that the number in the presentation, Mark, that is purely illustrative and based on what it was historically, just to indicate that there is future value from the capacity market for existing assets when that current contracts under the scheme expire.

As we have no further questions on the conference line, that concludes our Q&A session. And I would now like to turn the call back over to management for closing remarks.

Okay. Well, I believe there are no questions in the webcast. So I guess I'll wrap up by saying I think the -- maybe I want to leave you with one thought, right, which is that I think where we're going to go from here is that we had a strong 2025. I was pleased with the way we overdelivered on our operating earnings there. Looking into 2026, again, we are comfortable with the consensus, and we're looking forward to delivering on that.

When we get into 2027, I think we start to really become, in some ways, quite a different company, right? We'll have the new CfD, and we actually have a strong growth trajectory from there, right? We've got the battery transactions you've already seen. We expect to be investing more of that sort of GBP 2 billion of available cash flow going forward. So -- and also the sort of the mix of things will start to shift, right? We'll be sort of maybe 50% biomass, 60% FlexGen and, over time, FlexGen should grow, and we look forward to sort of developing that new business as a sort of a leading growing dispatchable renewable energy company in the U.K. So watch this space.

Thanks, guys.