Rising gas price ‘will boost Drax earnings’

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Drax is likely to benefit from rising gas prices over the next two years, according to analysts at Deutsche Bank.

The bank has raised its earnings estimate for the coal power generation company, which is in the middle of an ambitious biomass conversion programme, by 10 per cent.

Analyst Martin Brough is expecting European gas markets to tighten and cause a rise in UK gas prices from 2014. That would make burning coal and biomass look more competitive.

“With indigenous gas production in steady decline, Norwegian output at peak and limited new LNG capacity due to come online we expect increasing pressure on European gas supplies and an increasing reliance on Russian gas.

via Rising gas price ‘will boost Drax earnings’.

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