MARK WILLIAMSON
THE head of Scottish Power has underlined the company’s enthusiasm for the
renewable energy business in the UK where it intends to invest €8.4 billion
(£6.3bn) over the next five years.
Chief corporate officer Keith Anderson said the investment will be
concentrated on boosting the company’s renewable energy generating capacity
and related networks reflecting the Spanish-owned company’s confidence in
the UK market.
“Our renewables business has been performing very, very well. We have seen
the profitability of the business grow very, very rapidly,” he said.
As Scottish Power gave the green light to plans to build a £2.5bn windfarm
off East Anglia yesterday, Mr Anderson emphasised the appeal of such assets
compared with traditional plants.
“Coal and gas generation is not making any money,” complained Mr Anderson,
who said the supply of gas and electricity to consumers is a fiercely
competitive business.
Scottish Power will close the coal fired Longannet power station in Fife
next month.
However, Mr Anderson said the Government needed to do more to encourage
firms to build new gas plants as growing numbers of coal-fired generators
are closed.
“Otherwise longer term we’re going to have some significant issues around
security of supply,” warned Mr Anderson. He believes the UK gains some
assurance from being part of the EU.
“The EU Referendum is a matter for the British people,” noted Mr Anderson,
adding: “We are encouraged by and support the strong position the Prime
Minister is putting to the people of Britain. From tackling emissions to
strengthening security of supply, the UK benefits from being part of a
greater European market.”
As a subsidiary of Iberdrola, Scottish Power is part of a giant European
group which has decided to devote around a third of its total €24bn
investment budget to the UK over the five years to 2020.
Mr Anderson said the appeal of wind energy assets in the UK had been
reinforced by weather conditions last year. The company generated record
amounts of renewable energy helped by very windy conditions in Scotland
The costs of developing wind farms has fallen dramatically. Offshore wind
facilities cost around £160 per megawatt hour three years ago.
The new ONE facility off East Anglia will cost £120 per megawatt hour.
He praised the UK Government for providing the stable regulatory
environment needed to encourage firms to invest in offshore windfarms.
Scottish Power will continue investing in onshore windfarms, although the
Government wants to end subsidies. It is investing £300m in the Kilgallioch
scheme in South Ayrshire, which will become one of the biggest onshore
windfarms in the UK.
Scottish Power’s Whitelee wind farm near Glasgow is the UK’s largest
onshore windfarm.
Mr Anderson said the company does not want subsidies. However, the
Government must ensure companies will be able to sell power to the National
Grid at a price that makes it worthwhile investing in new facilities.
Scottish Power’s renewables division increased earnings before interest,
tax, depreciation and amortisation by 65 per cent to €438m in 2015, from
€265m the preceding year, helped by a first full year’s contribution from
the West of Duddon Sands windfarm in the Irish Sea.
The division of Scottish Power that runs traditional power generation
facilities and sells and electricity to consumers had a tougher time, with
ebitda falling eight per cent to €421m from €460m.
Mr Anderson said the fall partly reflected competition in the retail
business and defended the company’s record on the prices charged for
electricity and gas.
The company is cutting standard domestic gas prices by an average 5.4 per
cent next month.
Mr Anderson said the cost of a typical fixed price duel fuel supply deal
has fallen to £850 a year, from £1,100 around three years ago.
Scottish Power increased customer numbers by 20,000 to 5.5m in 2015.
Iberdola recorded a €230m after tax impairment charge for the closure of
Longannet.
Scottish Power’s ebitda increased to around €2bn from €1.7bn.
Profits in the networks arm, which runs power lines and the like, increased
to €1.14bn from €1.02bn.
Iberdrola increased ebitda to €7.3bn from €6.9bn.
1 Comment