Slaughter and May advised Drax on entry into low carbon dispatchable contract-for-difference

Slaughter and May advised Drax Power Limited on its entry into a low carbon dispatchable contract-for-difference with the Low Carbon Contracts Company. The transaction concerns a new low carbon dispatchable contract-for-difference (LCD CfD) providing transitional revenue support for Drax Power Station. The agreement was entered into on 5 November 2025 following earlier heads of terms announced this year. The LCD CfD runs from 1 April 2027 to 31 March 2031 and covers generation from all four biomass units at Drax Power Station. The LCD CfD is based on the renewables contract-for-difference but contains specific features designed to support UK energy security and the transition to intermittent renewable generation. Notably, the contract imposes an obligation for each unit, and for the station as a whole, to generate a minimum amount of power in each summer and winter season throughout the term. The contract also includes a profit gain-share mechanism under which Drax will pay the Low Carbon Contracts Company a share of profits above specified thresholds. The agreement contains enhanced sustainability requirements. It requires that 100% of woody biomass supplied to the station must come from sustainable sources and includes controls on sourcing from primary forests and old growth forests, together with provisions for monitoring and enforcement of those sustainability criteria. Slaughter and May represented Drax Power Limited in the transaction, with a team composed by: Oliver Moir, Partner, Energy and Infrastructure; Iain McCann, Associate, Energy and Infrastructure; Enrique Fajer, Associate, Energy and Infrastructure; Victoria MacDuff, Partner, Corporate.

Slaughter and May advised Drax on entry into low carbon dispatchable contract-for-difference

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