The company also said on Wednesday it expects 2021 adjusted core profit at the higher end of market expectations as it takes steps to control costs in the face of supply chain issues. Its shares rose 6.2% to 584 pence by 0850 GMT.
Drax, whose power stations provide around 6% of Britain's electricity, said it was targeting biomass pellet production of 8 million tonnes per annum (Mtpa) by 2030, compared with current production of 4 Mtpa.
Strategic capital investment is expected to be around 3 billion pounds between 2022 and 2030, Drax said, as the new target will require over 3 Mt of new biomass pellet production capacity and other carbon capture facilities.
Drax is developing technology to capture and store emissions generated from burning wood-based biomass pellets, which are categorized as renewable power, and hopes to have this up and running at a plant in Britain by 2027.
It has also been considering building a biomass plant in the United States.
JP Morgan analysts called the company's self-funded investment programme as "ambitious yet realistic".
Several energy companies have struggled with soaring wholesale energy prices in Europe's tight gas market, with more than 20 British energy companies collapsing since September.
"The Group's strong forward sold position means that it has not been a significant beneficiary of higher power prices from these activities in 2021 but has been able to increase forward hedged prices in 2022 and 2023," Drax said.
($1 = 0.7508 pounds)
(Reporting by Shanima A in Bengaluru; Editing by Devika Syamnath and Kim Coghill)
By Shanima A