Dorothy Thompson, the chief executive, signalled that while there were no immediate plans, Drax may decide to go nuclear after the Government’s forthcoming energy review if the option was “value-added for the business”.

“We are alert to serious opportunities and remain aware of developments in the market,” she said. “Nuclear falls under that statement.”

The comments come just weeks after British Energy called for external investors to help to fund its investment in what is likely to be a £30 billion nuclear programme over the coming years.

Experts believe that at least six new nuclear plants will be needed as existing facilities are decommissioned over the next two decades. Foreign power-houses such as EDF, RWE and E.ON are all believed to be circling.

Analysts said that while Drax was unlikely to be interested in building new plants, its expertise could be of interest to potential investors looking for a joint venture.

Lakis Athanasiou, analyst at Collins Stewart, said: “Don’t rule Drax out in terms of technical capability, but their priority is augmenting returns at their existing power station.”

Ms Thompson said that Drax had been approached about potential alliances but insiders insisted these were over far smaller, environmental projects.

Drax has enjoyed a dramatic revival since a brush with bankruptcy four years ago when AEP, its former American owner, withdrew financial support. Annual results yesterday confirmed its recovery with record electricity prices helping pretax profits to soar 140 per cent to £634 million last year. Revenue climbed 49 per cent to nearly £1.4 billion.

Shareholders will pick up a special dividend of 32.9p per share, worth £121 million, on top of a final payout of 9.1p per share. It means investors have been awarded £497 million for 2006-07.

Drax said that it would continue to hand back the bulk of its profits, but confirmed plans to “go green”. It will invest £67 million in a co-firing project that will see biomass replace 10 per cent of the coal burnt at its North Yorkshire plant. Reaching the 10 per cent target by 2009 will save 2 million tonnes of carbon emissions a year, equal to the output of 460 wind turbines.

The company wants to use olive cake from Spain and Greece alongside huge amounts of energy crops, such as elephant grass and short-rotation coppice, if the Government relaxes caps on biomass as a renewable source.

Drax is already spending £100 million to improve the efficiency of its turbines in an effort to reduce the energy lost during the burning process.

Ms Thompson said that she hoped the initiatives would win over an environmental lobby that has long targeted Drax for being the biggest single source of carbon emissions in the UK.

More than 600 eco-protesters tried to shut the plant down last August in a mass demonstration.

Ms Thompson told The Times: “I have a very strong hope that they will not return this year and that they will find a different way to raise their issues.

“The issues are very real, it is something we and others should be working on, but we didn’t think the protest itself last August was responsible and it put people at risk.”

Yesterday’s results showed carbon emissions at Drax rose to 22.7 million tonnes in 2006 from 21 million the year before.

Reaction times


The present

– Britain’s current nuclear fleet supplies 19 per cent of electricity demand

– British Energy owns gas-cooled reactors at Hinkley Point, Dungeness, Heasham, Hunterston, Torness and Hartlepool and a pressurised-water reactor at Sizewell

– The Government owns Magnox nuclear power stations that are near the end of their workable lives


The future

– Electricité de France, which owns the largest nuclear power generator in Europe, has expressed interest in developing nuclear power in the UK

– Areva, of France, is keen to build in the UK, using its pressurised-water reactor being trialled in Finland