Drax, Britain's most polluting plant, to power £20bn AI datacentre

Britain's most polluting power plant could power the country's largest datacentre under a deal worth more than £20bn ($26.8bn) that would anchor new AI infrastructure on the site of the Drax power plant in North Yorkshire. The FTSE 250 owner of the plant has struck the agreement with the infrastructure investor Brookfield and the AI infrastructure platform Radiant, and the datacentre could begin operations by early 2028.

The stakes are considerable for both the UK's AI ambitions and its energy policy. Drax, the largest power plant in the UK, produces almost 5% of the country's electricity by burning woody biomass pellets, which makes the site the single largest emitter of carbon dioxide, according to analysts. Its pivot toward hosting compute infrastructure comes as ministers signal plans to limit its power generation in the future.

What does the deal involve?

The project will unfold in phases, each with concrete capacity targets and timelines. Under phase one, the datacentre would be operational from the first quarter of 2028 with up to 100MW of compute capacity. The eventual capacity of the development is planned to exceed 1 gigawatt.

In the initial phase, Drax will provide the datacentre project with land and access to the national power grid through existing connections on the site. The company hopes to begin powering the datacentre directly by the early 2030s, after clearing the regulatory approvals needed to begin supplying the facility directly before 2031 in order to secure its future revenues.

Drax said the development could attract more than £20bn ($26.8bn) in investment and represent what it called "the next chapter" for the former power plant.

What did Drax and its chief executive say?

The Drax chief executive, Will Gardiner, framed the project in economic and strategic terms. He said the project would "help secure the long-term future of the site and protect hundreds of jobs" while "supporting the north's reindustrialisation and strengthening sovereign AI capability".

The emphasis on sovereign AI capability ties the project to a broader policy debate about whether Britain can host large-scale compute infrastructure domestically rather than relying on foreign providers. The government itself has elevated datacentres to the level of core national infrastructure in its recent planning language.

Why does Drax face pressure on its power generation?

The deal arrives at a moment of vulnerability for Drax's core business. The UK government has promised that Drax would play a "much more limited role" in future, after growing concerns over the company's sustainability claims.

The company's biomass emissions are not accounted for by the UK government, because Drax claims the equivalent carbon emissions are absorbed by growing trees that provide the waste wood used to make the biomass pellets. Analysts, however, already count the site as the single largest emitter of carbon dioxide in the country.

The financial backdrop is tightening. From 2027 to 2031, Drax will have access to only half its current £2m a day subsidies. That halving of support has sharpened the company's search for new revenue streams, and a directly supplied datacentre would secure future income beyond the subsidy cliff.

The market responded favourably to the announcement. The company's market value climbed by almost 9% on the London Stock Exchange, to almost £3bn, and equity analysts welcomed the news.

How does this fit UK datacentre policy?

The deal emerged a week after the government published a draft national policy statement on datacentres, which said they were "as fundamental to our economy as the railways and electricity networks on which we have long depended".

The government's language went further on control. "We must take control over the development of datacentres in this country and ensure that the country and host communities benefit from them," the government said.

That statement, combined with the Drax deal, signals an intent to treat datacentre construction as a matter of national economic strategy rather than purely private commercial development. The timing suggests coordination between industry planning and policy direction, with the draft statement giving planning weight to datacentre proposals.

Can the UK grid handle a datacentre boom?

The question of power supply remains the central tension in the story. The UK's congested grid infrastructure and ambitious legally binding climate targets have raised questions over how a dash to build datacentres could be powered without relying heavily on expensive and polluting off-grid gas generation.

The Drax site offers one answer: existing grid connections that can serve the first phase from 2028 without new transmission build-out. Direct supply from the plant itself would follow in the early 2030s, if approvals arrive before the 2031 deadline Drax has set for securing its future revenues.

The risk is that other datacentre projects, lacking a site with existing connections, could fall back on off-grid gas generation — a outcome at odds with the UK's legally binding climate targets. The government's draft policy statement and the Drax arrangement together will serve as an early test of whether the country can scale AI infrastructure within its carbon constraints.

What happens next?

The immediate milestones are regulatory and financial. Drax must clear approvals to supply the datacentre directly before 2031, the date its halved subsidy regime runs to its horizon. Phase one construction must deliver up to 100MW of compute capacity operational by the first quarter of 2028, with the build-out toward more than 1 gigawatt following.

For the UK's AI sector, the project's success or failure will shape whether further gigawatt-scale datacentre proposals can find both grid access and credible power supply — the two constraints that currently define the ceiling of British compute ambitions.