North Yorkshire-based power company Drax Group is in talks to buy a number of ScottishPower assets as it continues to diversify away from coal-burning generation.

Drax said in a statement on Monday it is in discussions with Spain’s Iberdrola, ScottishPower’s parent company, to potentially buy a UK portfolio of pumped storage, renewable hydro and gas-fired generation assets.

According to reports, the deal could include 1,940MW of combined cycle gas turbines and 566MW of hydro assets.

“Further to recent press speculation Drax confirms that it is in discussions with Iberdrola regarding a potential acquisition of a UK portfolio of pumped storage, renewable hydro and gas-fired generation assets,” said Drax.

“The discussions are preliminary in nature and there can be no certainty of any agreement or the timing or terms of any such agreement.

“Any potential acquisition would be fully debt funded and subject to shareholder approval.

 “A further announcement will be made as and when appropriate.”

RBC analyst John Musk told the Financial Times: “We do not see this news as entirely surprising given Drax’s ambitions to expand its UK generation footprint into more flexible and low-carbon assets.”

RBC estimated that the combined value of the assets is between £750 million and £1 billion, with the hydro assets comprising two-thirds of the total.

Musk said the “jewel” of the deal would be the Cruachan pumped storage facility in the Scottish Highlands.

“I don’t think Drax would be buying the CCGTs without the pump storage,” said Musk. “It’s a very strategic asset.”