Tolling agreement: Drax signs 500 MWh BESS deal with Fidra Energy

Drax has signed a tolling agreement for a 250 MW/500 MWh BESS in England, providing the developer with full operational control and dispatch rights, excluding capacity market revenues.

The 10-year agreement applies to Fidra Energy’s West Burton C BESS project, which is under development in Nottinghamshire with a target commercial operation date in 2028. The deal is subject to the BESS entering commercial operations by the second half of 2029.

Construction, maintenance and availability risk for the project remains with Fidra Energy, as the deal has no upfront capital cost to Drax. Under the tolling agreement, Fidra Energy will receive annual payments indexed to the consumer price index – a common measure of inflation in the United Kingdom.

Tolling agreements have become increasingly common in the UK BESS market since the Octopus Energy and the Gresham House Energy Storage Fund inked the first deal in June 2024. The agreements see BESS owners hand over control of operations to a third party who takes on the risk and reward of trading the battery storage asset on the market. For the developer, tolling agreements shield exposure to merchant risk.

Will Gardiner, CEO of Drax, described the agreement as an “important step” in the company’s ambition for a “gigawatt-scale pipeline of battery storage opportunities.”

The tolling agreement follows Drax’s recent acquisition of UK battery optimization business Flextricity, plus three battery storage developments.

“We are working to create opportunities for growth and value creation in our FlexGen portfolio that are aligned to the UK’s needs, and are underpinned by strong cash generation, disciplined capital allocation and attractive returns for shareholders,” Gardiner said.