Ladies and gentlemen, welcome to the Drax Half Year Results presentation. My name is Nairobi, and I will be the operator for your call this morning. If you would like to ask a question during the question and answer session on today's call, you can do so by pressing star followed by one on your telephone keypad. I will now hand you over to Will Gardiner, CEO. Please go ahead, sir. Thank you, and good morning, everybody. I'm here with Andy Skelton, our Group CFO, and we will take you through the presentation, followed by a question and answer session. I'm gonna start on page five. As you all know, our purpose is and continues to be very much at the core of who we are. It's about enabling a zero carbon, lower cost energy future. Our ambition is to be carbon negative by 2030. Importantly, we continue to be the largest UK pure play renewable power company. Over the most recent period, we generated 11% of all of the UK's renewable power. We're also the world's leading biomass generation and supply company. Over the last six months, I would say the global momentum for decarbonization continues to grow in spite of all the challenges that we see around us. I would say importantly, the importance of carbon removals and the role that BECCS can play to deliver them globally is becoming increasingly widely recognized. The other key message for the last six months is we've been very focused and I think, successful in helping to support security of supply in the UK, enabling us to generate significant amounts of cash. That supportive environment is allowing us to accelerate our investments in renewables globally. The final point I would make before I sort of kick off to sort of the core of the presentation is that the broader stakeholder appreciation of the role that Drax is playing is growing, and we are increasingly well-positioned to take advantage of growth opportunities in flexible renewable generation in the UK and in biomass and BECCS globally. Turning to page six. We're making great progress with our strategy and have lots of options for growth both in the UK and globally. We're making progress on our pellet expansions, on UK BECCS, and on Cruachan II. We're also increasingly excited about the opportunities for BECCS in North America. We're working on site selection. We see increasing regulatory support and more commercial interest, which should enable us to do projects that will deliver attractive returns. In terms of the in-year performance, we've had a strong financial and operational performance. Our EBITDA of GBP 225 million is up by 21%. In pellet production, our output has increased by over 50%. In our generation business, the importance of our secure, sustainable, dispatchable, renewable power has never been more clear. In our customer business, we've delivered a good operational performance and strong EBITDA. As evidence of our confidence in the business and the opportunities in front of us, and also in line with our policy on dividends, the board is expected to recommend an increase in the dividend per share to 21 pence for the full year, an increase of just under 12% for the year. Turning to page eight. Our aim is to be a future positive company. We're building a long-term sustainable business with strong operational and financial performance that delivers low carbon growth. We're looking to deliver people positive, nature positive, and climate positive outcomes, with the well-being of our employees and our communities at the core. To talk first about people positive. Safety remains our top priority, and the increase in recorded incidents in the first half of the year is a challenge that we're addressing. Our safety culture is very strong, but safety as a topic requires constant attention. Over the last 12 months, we've begun implementing a rigorous HSE improvement plan across North America, as well as reiterating our focus across the entire group as we align safety and environmental practices across the business. We expect investments in training, human resources, and capital projects to deliver improved performance. Turning to nature positive. All of the biomass we produce and use is audited against international biomass and forestry standards to ensure a strong chain of custody, which is fully in line with the best available science from the IPCC and underpinned by international law. The third leg of our positive story is about climate. Over the last decade, we've invested over GBP 2 billion in renewables. As a result, we've reduced our emissions, our CO2 emissions by over 99% more than any other European utility. Now over 99% of our power generation is from renewables, and that accounts for over 97% of our earnings. As you know, we have a GBP 3 billion investment program that we intend to carry out over the coming decade. Of that program, over 90% of it is invested in renewables or will be invested in renewables. We recognize the need to reduce emissions in our biomass supply chain to the Drax power station, and we're doing that. Over the last five years, those emissions have declined by over 20%. I should say, we have reduced those emissions by over 20% and have set ourselves further challenging targets to reduce the residual scope one, two, and three emissions that we still have by 42% relative to 2020 as part of our plan to become carbon negative by 2030. We continue to identify opportunities to further reduce emissions at all stages of our supply chain. In July of this year, we signed a memorandum of understanding with the Japanese shipping company MOL to develop wind power technology for use in shipping biomass between Canada and Japan. Let me talk a little bit more about our operations, and I'll start with our pellet production on page 10. Operationally, our pellet business continues to develop nicely. Production is up 54% and EBITDA is up 13%. Overall, our costs have been well controlled, with significant increases in fuel and utilities, as well as the impact of commissioning and optimization significantly offset by reductions in controllable costs, while at the same time we've have kept fiber costs broadly flat. Our international logistics costs are well protected by our long-term hedge position, and our third-party fiber purchases have seen small elements of price escalation. Andy will take you through more detail around our cost position as it pertains to pellets. At the same time, we've commissioned two new pellet plants adding 400,000 tons of capacity, and we expect to take a final investment decision on up to an additional 500,000 tons of new capacity later this year. Turning to page 11. We have a high-quality order book with over 21 million tons of long-term contracts to high-quality counterparties across Japan, Asia, and Europe, with sales revenue of $4.4 billion. We have ambitions to grow that book, as you know, to 4 million tons per year by 2030. As part of that strategy, we've opened a new office in Tokyo, a couple of weeks ago to support the growth of our business in Japan and across Asia. Turning to page 12 to talk more about generation. Our generation business continues to perform very well, providing 11% of the UK's renewable power. Against the backdrop of increasing concern around European energy security, during the first half of the year, we've optimized our biomass generation and logistics based on the amount of available biomass that we can see across the year, providing additional security of supply to the UK at times of expected higher demand. What does that mean in practice? In practice, this means generating less in the summer when demand is low, and reprofiling biomass deliveries to support higher levels of generation in the winter when demand is high. We expect to benefit from incrementally higher power prices and better availability as a result, but we have incurred additional biomass and logistics costs in order to deliver those actions. The integrated nature of our biomass generation, pellet production, and logistics has been a key enabler of this action, supporting U.K. energy security as well as creating value at a group level. Turning to system support, that was very strong, particularly at Cruachan, given the volatility we saw on the system. Overall gross profit from system support services increased, and we continue to expect that the value of these services will grow over time as the U.K. energy system becomes more dependent on intermittent and inflexible generation, and the role of dispatchable technologies becomes more pronounced. As you know, coal running was extended by six months at the request of the U.K. government, again, to support security of supply. We will receive a fixed fee for that, as well as recovery of our costs, but we will not run commercially. Importantly, in doing so, we have not made any changes to our plan or our schedule for BECCS at the Drax power station. Turning to page 13, talk a bit more about our trading and optimization. Our power sales strategy, which is to sell forward to the extent that there is liquidity in forward markets, is unchanged. Between 2022, i.e., this year, and 2024, we have a strong contracted position on our biomass units, and we expect to sell around 14 TWh per year across the ROC and CFD units. We're fully hedged for ROC sales this year, to a large extent hedged next year, while 2024 remains more open, again, due to the lower levels of liquidity the further out one goes. I would note that we expect to deliver two plant outages on the ROC units next year, and accordingly, based on current ex-estimates, ROC generation will be incrementally lower as a result. Finally, to conclude the operational review, I'll talk about customers on page 14. I'm very pleased with the performance of our customer business. The team there has done an outstanding job, both operationally and financially, to recover from what was a very challenging environment during the pandemic in 2020 and 2021. As you know, we're repositioning our customer business to focus on its high quality I&C customer base. Those customers are lower risk than the SME customer base and are more aligned with our corporate purpose of enabling a zero carbon, lower cost energy future. They're all consumers of renewable power, which is an increasing demand in the U.K. As you all know, there is a significant premium emerging for renewable power, which positions us well as the largest generator of renewable power in the UK. With that, I'll hand it over to Andy to give you the financial review. Thank you, Will. Starting on slide 16. Adjusted EBITDA of GBP 225 million is a 21% increase on GBP 186 million in the first half of last year. It reflects increased pellet sales, a strong performance across our generation portfolio, and improved profitability in our Customers business. Excluding the gas operations that we disposed of in January 2021, the adjusted EBITDA from continuing operations grew 36%. While we have seen some inflation pressure in our biomass cost base, the integrated nature of our biomass supply chain and operations, combined with long-term contracts that we have in place for fiber, pellet procurement, and freight, continue to provide a good level of protection from any cost increases. Further, with indexation of UK renewable schemes and price escalators and third-party sales contracts, inflationary pressure in our cost base is offset by revenue growth. We have strong liquidity with available cash and committed undrawn facilities at the end of the period of GBP 539 million. Cash generated from operations of GBP 185 million increased 34%. While maintaining capital discipline, this strong cash generation provides capacity to invest in growth and support the payment of a sustainable and growing dividend in line with our long-standing capital allocation policy. We close the period with net debt to adjusted EBITDA of 2.5x and continue to expect this will be significantly below 2x by the end of 2022. Consistent with our policy to pay a dividend which is sustainable and expected to grow, the board has resolved to pay an interim dividend of 8.4 pence per share and expect this to be 40% of a full year dividend of 21 pence per share, an increase of 11.7% from 2021. This is subject to continued good operational performance in the second half of the year. Moving on to slide 17 and pellet production cost. We produced 2 million tons of pellets in the first half of the year, an increase of 54%, which primarily reflects a full six months worth of production from the Pinnacle plant acquired in April 2021. During the period, we shipped 1 million tons to third parties, compared to 400,000 tons in the first half of last year, and 1.2 million tons for the whole of last year. From the start of our cost reduction program in 2018, up until the end of 2021, our FOB production cost reduced $23 a ton or 14% to $143 a ton for the full year of 2021. Overall, in the period, our costs have been well controlled. However, we have seen an increase of 2% in the FOB production cost to $146 a ton. This increase principally reflects the impact of inflation on utility costs, which have increased over 20%, and in-country fuel surcharges. That's transportation costs of fiber to plant and pellets from plant to port, which have increased over 10%. It also reflects higher average production posture and commissioning of the plants at Demopolis in Alabama and Leola in Arkansas. Excluding these items, we continue to make progress on our cost reduction initiatives with a small reduction across the balance of production costs. With good fiber availability and taking account of changes in fiber mix by plant, there was no material change in overall fiber cost. During the period, our pellets business provided flexibility in biomass supply to support the reprofiling of biomass generation at Drax Power Station. Whilst this resulted in some additional cost, additional value has been created for the group across the financial year, demonstrating the value of our integrated business model. We continue to see opportunities for further cost reduction in line with our strategy. These reductions won't come in a straight line, and we'll always continue to optimize the value across the group. In addition to the increased production volumes from existing plants during the second half of the year, we expect to take final investment decisions on up to 500,000 tons of additional pellet production capacity, continuing the progress towards our aim to develop 8 million tons of production capacity by 2030. Further future cost savings will be delivered through widening our sustainable fiber envelope, continued operational efficiencies across production and logistics, and development of new technologies and innovation. Moving on to slide 18, the adjusted EBITDA bridge. Our pellets business delivered adjusted EBITDA of GBP 45 million, growth of 13%, and benefiting primarily from increased volumes. In addition to the increase in FOB production costs, I'd note that margin in the pellet business reflects mix of whether shipments are made to Drax Power Station or to our third-party customers. In the first half of this year, reflecting the acquisition of Pinnacle in April 2021, a higher proportion of pellets were shipped to third-party. Margins on these sales reflect the long-term nature of those contracts and the embedded shipping terms that primarily CIP versus FOB for our sales to Drax Power Station. Margins also impacted by the mix of pellets sourced from third parties or produced by Drax. Margin on pellets sourced from third parties reflect that they're pass-through in nature, and they leverage our existing supply chain infrastructure. Finally, I'd note an increased investment in non-production costs to support future growth opportunities in North America. In generation, a strong operational performance in biomass and pumped storage hydro was reflected in commercial availability of 86% on the biomass units and a 12% increase in the value of system support services provided. Against the backdrop of increasing concern around European energy security, we've optimized our biomass generation and logistics to re-profile generation from summer to winter to provide additional security of supply at times of expected higher demand. We expect to benefit from incrementally higher power prices in the winter, but have incurred additional costs both to ensure that we have biomass available at the right time and also to buy back the summer positions. To enable this delivery profile, which supports the security of supply over the winter, and to mitigate the financial risk associated with unplanned outage, we expect to run increased base load volume on all three ROC units, holding the CFD unit to provide resilience in the event of an unplanned outage. The outturn for the full year will therefore reflect operational performance of the ROC units in the second half of the year and the price achieved for any additional CFD generation. Our customers business delivered adjusted EBITDA of GBP 24 million, a significant improvement on the GBP 5 million lost in the first half of 2021, which was impacted by COVID-19 in the SME business. Improved profitability includes a mark-to-market benefit from lower customer demand, where excess power has been sold back into the wholesale market. Returning to slide 19 on capital investment. CapEx in the period totaled GBP 60 million, and we expect it to be in the range of GBP 290 million-GBP 310 million for the full year. The maintenance CapEx of GBP 70 million-GBP 80 million includes recurring and one-off maintenance at Drax Power Station, our hydro sites, and our pellet plants. We continue to evaluate options for our open-cycle gas turbine projects. These assets can play an important system support role, and whilst it's likely we won't hold these assets in the longer term, we continue to invest as appropriate in the short to medium term to fulfill our obligations under the capacity market contract and also to maximize value from our investment. We expect that CapEx this year will total up to GBP 120 million. As I noted, we also expect to take FID on 500,000 tons of new pellet capacity during the second half and expect spend this year to be around GBP 10 million. Moving on to slide 20 and looking at the balance sheet. We maintain a strong focus on cash flow discipline and maintenance of a robust balance sheet. It provides protection in times of economic uncertainty and a strong platform from which we can execute our growth strategy. Available cash and committed undrawn facilities provide substantial headroom over our short-term liquidity requirements. As expected, and reflecting the Pinnacle acquisition, closing net debt to adjusted EBITDA ratio of 2.5x at the end of the period, and that's calculated on a rolling 12-month EBITDA, is above our long-term target of around 2x. We continue to expect the group's net debt to adjusted EBITDA ratio will be significantly below 2x by the end of 2022. Both Fitch and S&P have recently affirmed our corporate credit ratings as BB+ stable. We also have a BBB flat investment grade corporate rating from DBRS. The quality of our group's assets, earnings, and cash flows provide further opportunities to continue to reduce the margin on our debt in the future. To support our growth ambitions for BECCS and other large-scale infrastructure projects, we sought as much flexibility as possible within the capital structure. During the period, we paid down a GBP 35 million index loan as it matured, and our next maturity is in 2024, 2025. The $500 million US bond is now our most expensive cost of debt, with a swapped back rate in GBP of just under 5%, and it's fully repayable at par in May of next year. We continue to assess economic opportunities within our capital structure. Now moving on to slide 21, sources and uses of cash. Earlier, Will mentioned our plans to invest a further GBP 3 billion this decade in our biomass supply chain, dispatchable generation, and negative emissions in the UK, which all underpin our ambition to become a carbon negative company by 2030. As a reminder, at CMD last December, we laid out how we think about self-funding these investments through returns generated from the existing business and returns generated by those strategic investments. You have noted our existing business is highly cash generative, with strong visibility over a high proportion of long-term index linked cash flows. We expect that our investment for growth will be underpinned by long-term linked earnings and cash flows, and whether that be power and carbon payment schemes for UK BECCS, a cap and floor type mechanism for Cruachan II, or long-term contracts with high-quality counterparties for extension of our third-party supply business. Starting with our end of 2022 net debt leverage below 2x, with assumed circa GBP 2 billion of free cash flow from the existing business. Next, the GBP 3 billion of strategic capital investment, the pellet capacity expansion, UK BECCS, and Cruachan II. Finally, a GBP 1 billion of post-tax cash flow from these strategic capital investments by the end of 2030. There'll be a phased contribution based on when projects become operational, with the first additional pellet plant in 2024, the first BECCS unit in 2027, and the second BECCS unit in Cruachan II in 2030. These investments are underpinned by high quality, stable earnings, and will deliver strong index linked cash flows well beyond 2030. Overall, this plan delivers a business in 2030 with significant EBITDA expansion, generating significant high-quality free cash flow, returning a growing and sustainable dividend, and with a net debt to EBITDA leverage significantly less than 2x. This plan also provides the capacity to support additional investment in BECCS outside the UK. We will always maintain strong capital discipline, and investments will always be subject to appropriate levels of risk and return. We believe that our high-quality strategic portfolio provides a range of options for financing, and our base plan is to self-fund these investments without the need for issuing equity. Finally, moving on to slide 22 in capital allocation. Our capital allocation policy launched in 2017 has served us well and remains unchanged. We believe that our ambitious growth plan is supportive of maintaining our credit ratings, paying a dividend which is sustainable and grows throughout the period of strategic investment. With that, I'll hand back to Will. Thanks, Andy, and I'd like to just talk a little bit about our strategy and then we'll open it up to questions. Turning to page 24. Drax is undergoing a remarkable transformation and is a growing international business at the heart of the green energy transition. This last half year has shown the value and importance of our business at the heart of the U.K. energy system, supporting an increasingly decarbonized system with dispatchable renewable power. We are investing to grow that business. Equally, the global demand for pellets is growing, and we are investing to meet that demand. Finally, I'm increasingly excited by the opportunities for BECCS globally. Carbon removals are rapidly moving up the agenda. Global policy frameworks are increasingly supportive, and we have a leading position with our project in the U.K. and the work we're doing in the U.S. and beyond. As a responsible business, driven by our purpose of enabling a zero carbon, lower cost energy future, we are reinvesting the vast majority of our cash flow in renewables to achieve our ambition of becoming a carbon negative company by 2030. Turning to page 25. Our strategy is about positioning Drax for long-term low carbon growth. In February, we laid out a series of milestones against which we could judge our progress in the delivery of our strategy. As you can see from this slide, we're making excellent progress. Let me talk more specifically about BECCS in the UK on page 26. In terms of our technology, our FEED study is progressing well, and we've commenced early stage enabling works. I would note that our agreement to provide a winter contingency service to the National Grid from our coal units is not expected to have any significant impact on our timetable for BECCS. Secondly, we submitted our planning application as expected. Third, the government's priority project selection process for gas, hydrogen, and industrial CCS projects is well underway. Earlier this month, the government published a consultation on GGR, or Greenhouse Gas Removal business models, which includes BECCS, and they will also separately consult on a power BECCS business model, which is, quote, "Reflective of its advanced technological readiness and the co-benefits of both power and negative emissions." It is very clear that the government is committed to BECCS and committed to greenhouse gas removals, and we expect to hear more on this, as well as see the publication of the Bioenergy Strategy Unit review in the second half of the year. Finally, I'd like to say a few words on REMA, the Review of Electricity Market Arrangements, which was also just published. With the UK government's long-term plan to identify and implement electricity market reforms to incentivize investment in an operation of a secure low carbon electricity system by 2035. Among other things, the government and also National Grid in its future energy scenarios, their scenarios include BECCS as part of their base plan, while also indicating that generation capacity will need to increase threefold by 2035, requiring investment of up to GBP 400 billion. We believe that our flexible, renewable and low carbon generation portfolio is well aligned with these long-term objectives. I would note that the government's Net Zero Strategy has previously indicated a requirement of 23 million tons of negative emissions by 2024, as well as rising up to 81 million tons in 2050. For context, that would be the equivalent of five and then 20 BECCS units of the Drax power station. While it's early days in terms of the consultation, there are multiple options that the government is looking to get inputs on. We think that our position in the system and our strategy is well aligned with wherever that market assessment may go. Critically, I think the investments that the whole energy system requires will need a stable long-term investment framework, and as such, we would expect that removal will be consistent with enabling that for companies. Turning to international BECCS on page 27. We're making great progress with our international BECCS work. We'll be getting more specific about our plans, settling on our technology and building the business case. We're most active in the U.S., where legislation is moving in a supportive direction, and I've laid out some of that on the slide. There is a clear ambition at both the state and federal level to support greenhouse gas removals, including BECCS. Through the remainder of the year, we'll continue to engage with policymakers, narrow down region site technology options, as well as progress commercial discussion with potential buyers of firm renewable power and negative emissions. I would also say that outside of the U.S., we're seeing increasing interest in coal to biomass conversions, which we expect also to lead to additional opportunities to provide BECCS. Finally, on page 28, a bit on our outlook. Our purpose, enabling a zero carbon, lower cost energy future remains at our core, as does our ambition of becoming a carbon negative company by 2030. Our strategy is now designed to deliver growth in three areas: pellet sales, negative emissions and dispatchable renewable power. Fundamentally, I'm extremely excited about the future of BECCS. We sit in front of a massive energy transition globally that will require our biomass, our BECCS and our ability to generate and sell renewable power and system support. We have a unique position with our portfolio of assets, and we are increasingly positioning the company as a growing international business at the heart of the green energy transition. Thank you for listening, and Andy and I are happy to take any of your questions. Why don't we start with live questions and then we'll also take the written ones that may come in from those of you on the webcast. If you wish to ask a question, please press star followed by one on your telephone keypad. If you change your mind and wish to remove your question, please press star followed by two. When preparing to ask a question, please ensure your phone is unmuted locally. To confirm that star followed by one to ask a question. Your first telephone question today is from John Musk from Royal Bank of Canada. Please go ahead. Yes. Morning, everyone. Hopefully, you can hear me. Yeah, we can hear you, John. That's great. So yeah, two questions. Firstly on the pellet costs and the slight increase that we see there. Really just to get your sort of thoughts on how achievable the previous targets now are. I think we had a target of $130 per ton before the end of next year and then $100 per ton in 2027. Yeah. Are they still achievable? And I guess secondary to that, are they still the right targets given the inflationary pressures we're seeing around the world, and also given the power price environment that we've got in the UK, do those targets still make sense to you? Secondly, on the CapEx, obviously it's increased with the OCGT spend of GBP 120 million in there, but I think like for like, it actually gone down, seemingly, the CapEx on the FEED study for BECCS and the CapEx on some of the pellet plants is lower than what we were guided at the full year. So what's going on there? Are they just sort of slightly delayed in terms of the CapEx on those projects? Okay. Yeah. I think we lost you a little bit at the end there, John Musk. But I think the question was, are we changing our CapEx guidance in terms of, some of the things other than the open cycles? I'm gonna actually ask Andy Skelton to answer both the pellet cost question and also the CapEx question. On the pellet cost, John, as you saw in the first half, we've had the inflation pressures on utilities and fuel surcharges w hich I expect will continue through the second half of this year. To some extent, the commissioning of Demopolis and Leola will have some cost in the second half as well. We have been, as we noted, optimizing to make sure that we can support the generation reprofiling, and that means we incur some cost, but ultimately for the group, there's value there, and that makes absolute sense to do it. Clearly the exit run rate that we leave this year will be higher than we previously thought. I think the important thing is that the opportunities for cost reductions haven't changed. We've always said that those cost reductions won't come in a straight line. Clearly we've made very good progress since the start of that program. We'll continue to focus on taking costs out of the pellets and believe there's opportunity to do that. To your second point, though, $100 a ton was set in the context of GBP 50/MWh power prices, and that's not a world that we're in right now. Maximizing value means that you need to access pellets at the right time and get them to the right place. If it takes extra cost to do that, but create value for the group, then that's something that we will continue to do. No change in the opportunity to take costs out. Opportunity to optimize and create value and some short-term inflationary pressures. On the capital, there's just a phasing thing there. I think of when the FIDs on new pellet plant happen. We expect now one before the end of the year and the spend slightly lower and the FEED study. I think the FEED study, John, is. There's no slowdown there. It's progressing according to plan, just slightly lower of value than we had previously expected to spend today. No change in those projects. Okay. That's great. Thank you. The next question comes from the line of Martin Young from Investec. Please go ahead. Yeah, good morning to everybody. I've got a couple of questions as well. Can I just continue firstly on the pellet cost issue that John, you know, mentioned. Totally buy into the idea that the opportunity for cost reduction is still there. If various component parts of the cost of a pellet has gone up, surely we should be looking at rebasing the $100 per ton target. Maybe by not a lot, but, you know, maybe to 105, 110, that type of number. Is that a reasonable way to be thinking about it? The second question was about what you were saying in respect of output in calendar year 2023. Do I interpret those comments as saying there will be a significant step down in the ROC units? Given that everything is pretty much driven by biomass availability, you'd get the CFD unit back up to about 5 TWh worth of output, meaning you only have to do nine across the 3 ROC units to get to the 14. This is not a case of you guiding down on actual generation from the entire plant. This is just you telling us that the ROC performance of 2022 is unlikely to be repeated in 2023. Thanks. Maybe I'll take the second one. The second. Probably easy, Martin, 'cause I think you've answered the question very well. I think the way you've described it is right. We wanted to make sure that people were aware or I'm sure you are aware, but to sort of highlight those two outages because it does impact the where and which units will generate and the timing of it. But that shouldn't. Again, the major constraint we have on overall generation is the availability of pellets, right? I think you've got that one right. Maybe I'll go back to Andy again on the pellet cost. Yeah. I mean, Martin, we've always had inflation in our pellet cost base. It's just the cost reductions we've made have outstripped that inflation. It's harder to do in the current environment. If you look at where those costs are, they're on utilities and they're on bunker fuels. You know, that's a common theme right now, and I guess if you're in a world of higher utility costs and higher bunker fuel costs, we're probably in a higher commodity price environment and in the whole picture for Drax, you know, that extra cost in the pellets isn't a huge concern. In a higher commodity price environment, continued opportunity to optimize. I'm not... Like, we're not formally moving off our pellet target right now, but clearly, chasing the $100 a ton and giving up commercial value for the group doesn't make sense. We'll do the best thing to maximize value for the group, but there's always gonna be value in taking costs out of that pellet cost base. As you know, the opportunity still remains to do that, and we'll keep focused on that. Okay, thanks. As a reminder, if you would like to ask a question, please press star followed by one. The next question is from the line of Mark Freshney from CS. Please go ahead. Hello. Thank you for taking my questions. Firstly, on cost inflation for the CapEx projects. I mean, clearly OCGTs would have been largely fixed, but I'm thinking in terms of what your FEED study is showing some of the capital cost. Secondly, I was intrigued a couple of weeks ago by Ofgem's balancing market review and the work they've done with ESO and some of the, as they call it, immoderate bidding behavior by generators. It's pretty clear that Ofgem is going to have to intervene in that market to stop scarcity pricing somehow. I just wondered on your thoughts regarding that investigation and how that may impact the dispatch of some of the Drax units, if at all. Thank you. Thanks for those questions, Mark. I'll start with the cost inflation. I think you're right. The open cycles are largely fixed. I think we're in reasonable shape there. FEED study, we haven't got any numbers to give you guys yet on that. I think you're right. We would expect that relative to where we were a couple years ago, there will be inflation in some of those numbers. But I think importantly, if you think about the long-term sort of value or sort of drivers of value across the BECCS investments, it's really the sort of long-term. It's the operating cost is probably in some ways more relevant than the capital costs over the lifetime. To Andy's point, you know, we continue to try to find ways to make sure we keep the pellet and the fuel costs down, and that's very much of our focus. As we finish those FEED studies, we will again incorporate those numbers into our sort of plans for what it costs and then the returns that will be required. In terms of the balancing market review, I mean, clearly Ofgem wants to make sure that people are operating in the markets as they should do. And as you noted, they are sort of continuing to investigate some things that happened there. You know, how they end up responding to sort of where that market is, I mean, remains to be seen. I think that the value and the importance of system support and the value of dispatchable power will, you know, it continues to be important. I think, you know, again, obviously we are always dispatching those in ways that are compliant and consistent with the way the rules in the market work, and we'll continue to do that. If I could just have a follow-up, Will. Would it also be fair to say that increasingly you're running base load stints during winter for unit reliability and to squeeze any output out? Actually, balancing market activity and two-shifting is going to be a lot less relevant for yourselves, certainly once you've divested, sorry, potentially, you know, dealt with options for the OCGTs. No, that I think that's fair, Mark Freshney. Right. Well, a couple of points. One is, you know, again, just to make sure it's crystal clear on coal, we're not running those commercially so that, you know, we will not be, you know, earning balancing market or prompt level pricing on those, that that's the way the contract has been set up. So I think that's important. As you say, we'll be running more base load across the winter on the ROC units again, so the less opportunity to be operating in the BM, and as you know, we're holding back the CFD unit as a reserve in the event of outages. So again, I would agree with your comments there. Thank you. There are no more telephone questions at this time. I head back to the web questions. Okay. Why don't I read out the questions and then I will ask Andy to answer them probably. The first question from Ahmed Farman, can you please give us some guidance on where you expect biomass FOB by year-end? What were the buyback costs on CFD units in the first half, and what are your expectations on these costs for the second half? I think we've answered the first part on the biomass cost by year-end. On the CFD units, I mean, the cost of buying back the CFD units is significant, but clearly it's only done because based on the reprofiling, and we expect this value as a whole in doing that. Most of that reprofiling has been done in the first half of the year, so we'll incur less cost in the second half of the year, I would expect. It is a significant cost, but value overall for the group. Second question from Alexander Wheeler. Has there been any further discussions re winter contingency going beyond this winter if the war continues? And if so, how would that affect the BECCS timetable? Is there space to build BECCS with the coal units still up? The answer to the first part of that question is that no, there has not been any discussion about running past the end of March of next year. If so, I mean, clearly the sort of moving down March becomes difficult for a bunch of different reasons, including the BECCS timetable, including sort of maintaining the coal units, et cetera. It will be quite difficult for us to do that. The final point, is there space to build BECCS with the coal units still up? And the answer to that is no. Next question from Verity. Chart, does the chart on page 21 on investment include the open-cycle or the OCGT completion? It doesn't include any U.S. BECCS expansion, and you have a target for U.S. BECCS now. How would you think about financing this? Why don't I ask Andy to look at the first two, and I'll ask him to the third piece, right? Yeah. The chart's the same as the one we showed at December CMD, so it doesn't include the OCGTs. I think on the point that we don't expect to be the holder of those in the long term, any CapEx that goes out would be recovered. In that whole period, I don't think it would impact the ending position. You're right that it doesn't include any US BECCS expansion. Though I think we had noted that because of the leverage at the end of the period and the strong cash flows, and clearly things have moved since December further positively, that we have the capacity for further investment, which would include the US BECCS. No, I just reiterate that on the last point, Verity. I mean, I think we haven't formally updated. I mean, the chart that you see there is the one we showed back at the capital markets day. There's no question that, you know, given where our expected cash flow generation has gotten to, we would be able to finance on our balance sheet one, if not more BECCS units in the U.S. Really it depends on overall how we finance BECCS outside of the U.K., which will obviously depend upon our ambition about which we would expect to talk more at a capital markets day, which is not formally scheduled, but probably will be in November. Another question from Ahmed. Could you talk about the impact of the cost inflation that you are highlighting today on the economics and CapEx of your future BECCS projects? Why don't I take that one, Ahmed. I think I talked a little bit about the CapEx already, let me back up. I mean, the way that we expect the project to work in the U.K. is that we ultimately will negotiate a CFD contract with the U.K. government that will compensate us for a combination of the power and the carbon removals. And that will be very much based on the cost of the project, and it will include. Which will have to account for both, you know, where our costs have gotten to at the time the contract is completed, but also where we expect costs to be over the life of that contract. Right? That's, you know, we're doing a lot of internal work on that ourselves now. We have not begun talking to government about that. Obviously, we still need to see the formal BECCS business models, and that's yet to come. That's our current expectation, is that ultimately, you know, that contract will be based on a cost base and a expected return that we would discuss and negotiate with government. Right? Outside of the US, sorry, outside of the UK, the projects we're looking at in the US and elsewhere might have a similar type of arrangement or they might be more commercially based. Meaning that, you know, we believe that there are markets in the US where there's an attractive demand for both carbon removals as well as 24/7 firm green power that effectively will allow us to sort of do this on a more commercial, probably a long-term PPA type basis, where, you know, again, we negotiate those contracts on a commercial basis with off-takers of both the carbon removals and the power. We would aim to make sure that we get, you know, a fair deal for us, a fair deal for them that allows us to earn the right return on our capital. The next question from Verity again. For the customer's business, how much of the return to profitability came from the sale of forward hedge power not required by the customers? I'll hand that one over to Andy. If you look at GBP 24 million versus a loss of GBP 5 million in the period last year, that's around GBP 30 million improvement. GBP 10 million-GBP 15 million of that we flagged as being the COVID impact last year. That leaves another circa GBP 15 million, and the majority of that is on the sale of back-to-back power. That has been, and we continue to focus on managing our costs within that customer's business. Over the last 12 months, we've closed offices in Cardiff and Oxford. Some of that is cost reduction and focus on that, but a large part of it, the mark to market on those sales. Question from Tim Ashton: Are you able to give any feel for how cost competitive UK BECCS will be relative to competing decarbonization plans or what the non-cash advantages would be if UK government decided to backpedal on climate change investment? A couple of thoughts on this. One is that the overall sort of cost base we've been discussing or the sort of target price we would expect to get for the combination of 1 megawatt hour of power and 1 ton of carbon removal is broadly speaking about GBP 150. You know, again, as you know, relative to where the power price is today, that's a pretty attractive package. And also I should say more, to be more clear, relative to the power price and the price of carbon, right? It's a quite attractive bundle, right? You're basically getting, you know, a megawatt hour of power and a ton of carbon removal for much less than you can get that power in the market and that CO2, right? That's one metric to look at. Now, obviously, who knows where that will be over a 10-year or 15-year lifetime. The other one to look at is, you know, what's the relative cost of other carbon removal technologies. If you look at what direct air capture players are selling their carbon removal for, you know, they're getting north of $500 a ton, right? Again, I think our technology is quite attractive relative to those, right? Fundamentally, I think, I mean, the key point for me is that the One of the things that's become, you know, is clear to me and becomes always more clear to me is the importance of the Drax power station to the overall U.K. power system. Having that sort of asset running, delivering today, you know, renewable power in the future, carbon negative power, is gonna be critical to the U.K. system because of the, again, because of the dispatchable nature of that power. We think it's a very good value for the investment. Maybe the final point I would make is we've done a bunch of work, which I'm sure is on our website, which basically sort of describes how our BECCS project is a very low cost way economically for the overall economy, very low cost way of decarbonizing, you know, to the tune of, you know, multiple billions, less expensive than other options. I guess final point is, you know, if the government is, well, I shouldn't say if, the government is absolutely serious about leveling up, and the jobs benefits, the supply chain benefits, the UK innovation benefits of having BECCS at Drax power station are quite significant, and would be a critical part of any decarbonization efforts in the Humber, which will be, I think, critical to the UK developing a next generation green economy in the North of England. Okay. It looks like that's all the questions. Thank you all very much for joining us, and you know how to get in touch with us if you have more questions or wanna follow up later. Thanks very much and have a good day. Ladies and gentlemen, this concludes today's conference. Thank you for joining. You may now disconnect. Goodbye.