The government contract that keeps Britain’s largest biomass power plant running after March 2027 was built to make it run less.

On Tuesday Drax said it will host an AI data centre on its North Yorkshire estate with Brookfield and its compute platform Radiant: up to 100 megawatts from early 2028, drawing power from the grid, then another 500 megawatts between 2028 and 2031, and more than a gigawatt in time. Drax had floated a data centre at the site late last year. Brookfield puts the potential investment above £20 billion, and Drax’s shares rose more than 8 percent that morning. What the site has is what most data-centre developers are queuing for — a grid connection of about 4 gigawatts and 2.6 gigawatts of generation already standing on it.

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The later phases are where it turns. Drax wants to supply up to 500 megawatts to the data centre directly from its own generators under a long-term contract. Its current support deal, signed a year ago, runs from April 2027 to March 2031 and is built around roughly 6 terawatt-hours of output a year. When ministers announced the terms in February 2025, they said the point was a much more limited role for Drax, generating only when really needed, and that the lower price and capped output would roughly halve the subsidy compared with its old arrangements. For scale, 500 megawatts running every hour of a year is 4.38 terawatt-hours, about 73 percent of the output the contract is built around.

None of this is settled, and the contract leaves room. It lets Drax sell power above the 6 terawatt-hours on the open market, and using generation for a data centre still needs government approval. There is no planning permission yet and no tenant. Drax says the station’s role in keeping Britain’s supply secure won’t change.

JPMorgan analysts told Reuters the deal could raise expectations that the plant keeps running after its subsidy ends in 2031. For years Britain paid Drax to burn wood for the grid, then signed a contract to have it burn less. The new use it has found for that power runs around the clock.