Slaughter and May advised Drax Power Limited (“Drax”) on a new low carbon dispatchable contract-for-difference (“LCD CfD”) for transitional revenue support for Drax Power Station. On 5 November 2025, Drax entered into the LCD CfD with the Low Carbon Contracts Company (“LCCC”) , following the entry into heads of terms for the CfD, announced earlier this year (on which Slaughter and May also advised Drax).
Drax Power Station provided 5% of the UK’s total electricity last year. The LCD CfD will support the rollout of intermittent renewable generation across the UK, support UK energy security into the 2030s and provide options to ensure Drax Power Station continues to play a long-term role in the regional economy and UK energy system.
The LCD CfD covers generation from all four biomass units at Drax Power Station and is based on the renewables contract-for-difference. However, it contains unique features in addition to the renewables contract-for-difference. In particular, the LCD CfD contains an obligation for each unit, and the station as a whole, to generate a minimum amount of power in each summer and winter season throughout the LCD CfD’s term (which runs from 1 April 2027 to 31 March 2031), contributing to UK energy security. Further, the LCD CfD includes a profit gain-share, under which Drax will pay to LCCC a share of profits over specified thresholds.
The LCD CfD has enhanced sustainability requirements, including that 100% of woody biomass must come from sustainable sources and controls around sourcing from primary forests and old growth forests. This focus on sustainability is also reflected in provisions relating to monitoring and enforcement measures in respect of sustainability criteria.
Oly Moir commented: "We are thrilled to have advised Drax on this unique and innovative support mechanism which is of significant importance both strategically to Drax and to UK energy security and the continued deployment of intermittent renewable generation."