Drax power plant to host UK's largest AI datacentre by 2028

A new chapter for Drax

The Drax power plant in North Yorkshire is set to undergo a massive transformation. The FTSE 250 owner of the site has reached an agreement with infrastructure investor Brookfield and the AI platform Radiant to build a large-scale datacentre. This project is expected to attract more than £20bn in total investment to the region.

This move comes at a critical time for the facility. The UK government has recently signaled plans to limit the plant's power generation in the future. By pivoting toward AI infrastructure, the company aims to secure the long-term viability of the site and protect hundreds of local jobs.

Drax chief executive Will Gardiner stated that the project would help protect jobs while supporting the north's reindustrialisation. He also noted that the move would strengthen the country's sovereign AI capability. The deal represents a significant shift for a site that has long been a staple of the UK's energy landscape.

Powering the AI boom

The project will roll out in phases to meet the growing demand for computing power. The first phase is scheduled to be operational by the first quarter of 2028, providing up to 100MW of compute capacity. Over time, the facility is intended to expand to a total capacity of more than 1 gigawatt.

Initially, Drax will provide the land and access to the national power grid through existing connections. However, the company has a long-term goal of supplying the datacentre directly from the plant. They hope to clear the necessary regulatory approvals to begin this direct supply by the early 2030s.

This timeline aligns with the UK's broader strategy for digital infrastructure. The government recently described datacentres as being as fundamental to the economy as railways and electricity networks. This deal provides a concrete example of how private investment is moving to meet those national needs.

The carbon contradiction

Despite the move toward high-tech AI, the Drax site remains a point of environmental contention. It is currently the single largest emitter of carbon dioxide in the UK, producing almost 5% of the country's electricity. The plant generates this power by burning woody biomass pellets.

The company argues that these emissions are carbon neutral because the waste wood comes from trees that absorb carbon as they grow. However, the UK government has expressed concerns over these sustainability claims. Consequently, ministers have promised that the plant will play a much more limited role in the future.

The government is also preparing to reduce the financial support the plant receives. From 2027 to 2031, Drax will have access to only half of its current £2m a day subsidies. This creates a sense of urgency for the company to establish new revenue streams through the AI datacentre project.

Grid and climate hurdles

The rapid expansion of datacentres faces significant logistical obstacles in the UK. The country's grid infrastructure is currently congested, making it difficult to connect new high-power sites. There are also strict, legally binding climate targets that the country must meet while expanding its digital footprint.

Analysts have raised questions about how the UK can build these facilities without relying on expensive and polluting off-grid gas generation. The government has stated that it must take control over datacentre development to ensure host communities benefit. This suggests a move toward more regulated and planned growth for the industry.

The market responded positively to the news of the Drax deal. Equity analysts welcomed the announcement, and the company's market value climbed by almost 9% on the London Stock Exchange. The stock price reached almost £3bn following the announcement of the partnership with Brookfield and Radiant.