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Britain's Drax half-year profit jumps on high prices and demand

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Sunset over Drax power station in North Yorkshire
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By Susanna Twidale

LONDON (Reuters) -Drax Group reported a rise in half-year profit on Tuesday, as the British power generator benefited from high electricity prices and strong demand for renewable power amid surging gas prices across Europe.

British electricity prices have soared over the past year, pushed higher by record high gas prices following Russia's invasion of Ukraine which has led to concerns over Europe's gas supply.

Drax has converted four coal-power units to use sustainable biomass and said its remaining two coal units would be available for use from October to March next year as part of Britain’s contingency plans to make sure of secure electricity supplies this winter.

Drax did not disclose how much the contract with National Grid Electricity System Operator (ESO) was worth but CEO Will Gardiner said on a call with journalists it included the cost of running the plants and of purchasing coal.

"The units are not running commercially, they (National Grid ESO) will cover the costs of dispatching... and we will receive a fee for that," Gardiner said.

Gardiner said none of the coal was coming from Russia.

Drax plans to close its coal plants in March 2023 in line with Britain's plan to end coal-fired power generation in 2024.

The group said adjusted core profit came in at 225 million pounds ($271.26 million) for the six months ended June 30, compared with 186 million pounds last year.

The company announced an interim dividend of 8.4 pence a share, up from 7.5p for the same period last year and said it expects a full year dividend of 21p, up 11% from 2021.

($1 = 0.8295 pounds)

(Reporting by Susanna Twidale in London and Muhammed Husain in Bengaluru; Editing by Sherry Jacob-Phillips, Kirsten Donovan)

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