GS Utilities Daily Drax Market conditions point to FY EBITDA upgrades

Equity Research 14 September 2026 | 8:49AM CEST

GS Utilities Daily: Drax: Market conditions point to FY EBITDA upgrades; maintain Buy // RWE and UAE collaborate on offshore wind and LNG

Alberto Gandolfi | Goldman Sachs Bank Europe SE - Milan branch

Ajay Patel | Goldman Sachs International

Mafalda Pombeiro | Goldman Sachs International

Dhwani Khenwar | Goldman Sachs India SPL

Lawrence Lavizani | Goldman Sachs International

Liam Brueckner | Goldman Sachs International

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Drax Group: Market conditions point to FY EBITDA upgrades; maintain Buy

We expect Drax to provide a trading update at the end of September. We see this as a positive catalyst for the company. The following charts in the note highlight: (1) month-ahead UK power prices, which have accelerated over the course of the year, and (2) the average monthly intraday spread between the highest priced four hours versus the lowest priced four hours for power. These dynamics benefit Drax’s unhedged generation positions (biomass generation & hydro, solar) as well as parts of the portfolio that benefit from higher volatility (pump storage, biomass generation, OCGT). We are 2% ahead of Reuters consensus EBITDA of £696m and see scope for further upside if current market conditions were to continue. We estimate Drax is capable of delivering >15% FCF yield pa beyond FY2031, even assuming no CFD extension at Drax Power Station. Incremental to this, we see upside potential from: (1) utilising the balance sheet to fund its new developed pipeline; (2) CFD extension at Drax Power Station beyond 2031; and (3) extracting value from the Drax Power Station site through large-scale data center development. In our view, this creates a picture with a risk-reward skewed to the upside. We remain Buy rated. More here.

RWE and UAE collaborate on offshore wind and LNG

RWE and UAE have announced the signing of two agreements: a Memorandum of Understanding regarding Offshore Wind between RWE and Abu Dhabi Future Energy Company PJSC – Masdar, and a Letter of Intent (LOI) between RWE and ADNOC regarding future LNG supplies. Under the MoU, RWE and Masdar intend to consider joint participation in German offshore wind auctions in 2027. This agreement has an indicative investment value exceeding €3 bn. The LOI builds on ongoing discussions about long-term LNG supply opportunities established under the Strategic Collaboration Agreement signed in February 2026. Source: Press Release

German Network package criticised by market participants

Germany’s upcoming networks package has been criticised since the plan was announced earlier this year. In particular, re-dispatch has been heavily debated, with originally only up to 20% up the electricity produced being allowed to be waived. Market participants warn that this would not only slow renewable expansion but would increase cost of projects. The network package is to be debated in the Bundestag on September 21. Source: Handelsblatt

Nordex Group secures 34 MW repowering wind order in Germany