AI-assisted research analysis by FutureKnowledge. Sources checked 3 November 2026. This is not investment advice.
Reviewed by FutureKnowledge: figures, dates and attributions were checked against the linked sources before publication.
Drax Group and Brookfield plan an AI data centre at Drax Power Station that could attract more than £20 billion of investment, about $26.8 billion, by Brookfield’s estimate, Drax told the London Stock Exchange on 3 November. The plan aims for more than 1 gigawatt of capacity, but only a first £2.5 billion phase has a timetable, and no part of it has reached a final investment decision yet.
Drax shares rose more than 8% in early London trading, Investing.com reported, with Milano Finanza and Resultsense putting the early gain at about 9%.
Drax and Brookfield AI data centre: what was announced
The agreement is to develop a partnership between three parties. Drax brings the land, power connection and generation. Radiant, which Drax describes as Brookfield’s UK-headquartered AI infrastructure platform, brings design and customer expertise. Capital and operating capability come through a Brookfield joint venture with Qai, a Qatar-headquartered technology company, announced in 2025.
The stock exchange announcement sets out three phases:
| Phase | Timing | Capacity | Power source |
|---|---|---|---|
| Phase 1 | Commercial operation targeted from early 2028 | Up to 100MW | Directly from the grid |
| Phase 2 | 2028 to 2031 (ambition) | Up to an additional 500MW | Behind-the-meter supply from existing Drax generation under a long-term power purchase agreement, subject to consents |
| Phase 3 | After 2031 (ambition) | Further capacity, taking the total above 1GW | Same behind-the-meter model |
Brookfield estimates the first phase at £2.5 billion. Its estimate of more than £20 billion in total includes the cost of semiconductor chips, which typically make up a large part of AI data centre spending. Drax did not disclose what it will earn from the project, whether through a land lease, power sales or an equity stake.
Why Drax is doing this
A site with power and a grid connection
The scarce input for large AI data centres in Britain is not land but power and a grid connection. The Drax estate covers more than 1,000 acres, has about 4GW of grid access next to one of the country’s largest substations, and has 2.6GW of active dispatchable generation, according to the company. Resultsense, citing BBC reporting, notes that some UK developers face waits of up to ten years for a grid connection. A site that already has one is valuable.
Life after the subsidy
Drax’s biomass units are moving onto a new support deal. In November 2025 Drax signed a Contract for Difference with the government covering about 6TWh a year of biomass generation from April 2027 to March 2031, roughly 30% of the station’s annual baseload output. That contract lets Drax ask to divert up to 500MW of capacity to a data centre during that period, but only with the agreement of the government and the Low Carbon Contracts Company, which will weigh value for money, energy security and sustainability. That is the route Phase 2 relies on.
Drax chief executive Will Gardiner said the project could help “secure the long-term future of the site.” JPMorgan analysts, quoted by Investing.com, said the deal could raise hopes that the station keeps running after the subsidy scheme ends in March 2031.
What could slow it down
The first phase depends on planning approval, regulatory and network approvals from the government and other agencies, finding an acceptable tenant, negotiating commercial agreements, and a final investment decision by each party. Radiant aims to sign anchor customers before construction starts. Public consultation is expected to begin this month.
Citi was more cautious than JPMorgan. It said the headline numbers look impressive but little financial detail has been given, described the deal as closer to a memorandum of understanding than a firm contract, and said it expects a planning application for the first 100MW soon, according to Investing.com.
Demand risk is also real. Last month Microsoft reportedly pulled back from anchoring an Nscale data centre near London, a reminder that UK projects need committed customers, as we covered in our analysis of AI financing pressures. Investors have also been questioning AI spending more broadly, with the Nasdaq 100 entering a correction on a chip sell-off this week.
Who is more or less exposed
- Power-station owners with spare grid capacity: the deal shows how an existing connection can be marketed to AI developers. Generators with similar sites may see more interest, though each deal still needs planning and network approval.
- AI infrastructure investors: Brookfield and Qai take on most of the capital risk. Returns depend on finding tenants at a time when some large cloud buyers are reviewing commitments.
- UK electricity consumers and the system operator: Phase 2 would redirect output from subsidised generation to a private customer, which is why the government and the Low Carbon Contracts Company must agree.
- Indian businesses: there is no direct Indian participant. The general pattern, that AI data centres are increasingly built where power and grid access already exist, also applies to data-centre plans in India.
Scenarios to watch
These are conditional scenarios, not predictions.
| If… | Then a likely consequence is… |
|---|---|
| Planning and network approvals for Phase 1 arrive on time and Radiant signs an anchor tenant | Final investment decisions become more likely and the early-2028 start date becomes credible. |
| No tenant is secured before construction | Phase 1 could be delayed, as Radiant aims to sign customers first. |
| The government and LCCC agree to divert up to 500MW under the CfD | Phase 2 could use Drax’s own generation, supporting the station’s role after 2031. |
| AI spending sentiment weakens further | Financing and tenant talks for the later, larger phases could become harder. |
What to watch next
- The start of public consultation, expected in November 2026, and the Phase 1 planning application.
- Any disclosure of Drax’s commercial terms, such as lease income or power sales.
- Whether the project qualifies under the UK government’s new Data Centre Covenant, which the partners say it aligns with.
- Talks with the government and LCCC on the 500MW option in Drax’s biomass contract.
Bottom line
The Drax and Brookfield plan is large in ambition but early in substance. The £20 billion figure is Brookfield’s estimate of total potential spending, including chips, over many years. What is firmer is a £2.5 billion, 100MW first phase that still needs approvals, a tenant and investment decisions. For Drax, the deal points to a possible use for its site beyond 2031. For the UK, it tests whether existing power stations can speed up AI data centre building.
Method note: we compared Drax’s stock exchange announcement and its press release with reports from Investing.com, Resultsense (which cites Reuters and the BBC) and Milano Finanza.Reports of the early share gain ranged from more than 8% to about 9%; we give the range. Analyst views are attributed to JPMorgan and Citi as reported by Investing.com. Drax’s financial terms were not disclosed.