The company is preparing a planning application for an initial 100-megawatt facility, with potential expansion beyond 1 gigawatt after 2031 to meet rising electricity demand linked to artificial intelligence and digital infrastructure.
"We would effectively provide the land and the power connection and the power working with a data centre developer," Drax Chief Executive Will Gardiner said in an interview.
Across Europe, operators of former coal and gas power plants are exploring similar conversions. Technology companies, including Microsoft and Amazon, are increasingly interested in sites that already have high-capacity grid connections and access to cooling water, helping avoid long delays in new grid queues.
Drax's announcement follows RWE's recent €225 million ($263 million) book gain from selling a decommissioned British coal plant site to a data centre developer.
JPMorgan analysts described Drax's timeline as more optimistic than many investors had anticipated: "While nothing has been agreed, we believe this is a more optimistic timeline than investors would otherwise expect."
Shares in Drax rose more than 2% after the company also guided that 2025 core profit is expected to reach the upper end of market forecasts, supported by stronger performance in flexible generation, biomass pellet production, and its remaining biomass units.
Looking ahead, Drax targets cumulative free cash flow of £3 billion from 2025 to 2031. The company plans to return more than £1 billion to shareholders while allocating up to £2 billion will fund growth opportunities.
Separately, Drax confirmed it is closing its Williams Lake wood pellet plant in Canada and pausing development of the Longview project, stating it does not plan new pellet production capacity in the short to medium term.
