By Mark Williamson Group Business Correspondent
SCOTTISHPOWER has hailed the benefits of its decision to focus on
renewables after posting a 27 per cent increase in annual profits.
The Glasgow based energy giant recorded underlying profits of £1.543
billion in 2018 compared with £1.215bn in the preceding year.
Read more: Energy price cap branded “con” as Scots energy bills set to rise
Chief executive Keith Anderson said 2018 was a pivotal year for
ScottishPower as the firm completed the “landmark” journey from coal and
gas to 100% green power by selling its conventional generation business.
The renewables division increased profits by 33% last year to £457.8m from
£343.3m. Mr Anderson said the increase reflected the benefits of the hefty
investment the firm made in 2017 in onshore windfarms in Scotland.
He also claimed that the decision to focus on renewables had helped
ScottishPower make progress in the retail business, which sells gas and
electricity to households, last year.
The Spanish-owned group’s liberalised businesses almost trebled underlying
profits, to £271.8m in 2018 from £94.7m. The bulk of the profits were
achieved by the company’s retail arm.
On Tuesday ScottishPower and Scottish Gas became the latest energy
suppliers to announce they were increasing their standard variable tariffs
after Ofgem upped the price cap.
ScottishPower said yesterday it had achieved a strong performance relative
to competitors in the sector last year, with customer numbers remaining
above 5 million.
“It’s clear our customers are backing our commitment to green energy and
our investment in a cleaner healthier future as, unlike others, our overall
customer numbers have remained stable in 2018,” said Mr Anderson.
However, ScottishPower’s numbers were boosted by the addition of 108,000
households and 21,000 businesses in November when the regulator appointed
the firm to take on the customers of Extra Energy after it ceased trading.
A series of independent energy companies hit the buffers last year
including Borders-based Spark Energy, which was left facing big financial
commitments under the official renewables obligation support scheme.
The introduction of the price cap on standard variable tariffs by Ofgem
from January put pressure on firms’ margins.
The price cap was labelled a con after Ofgem said recently it would
increase the typical limit for UK default and standard variable gas and
electricity tariffs by £117 to £1,254 a year from April 1.
The demise of independents could ease the pressure on giants. Many domestic
customers have switched to smaller players in recent years.
ScottishPower said yesterday it achieved a profit margin of around 3% on
retail sales in 2018 after facing challenges in the preceding year.
Customers numbers fell by around 200,000 in 2017, to 5.1 million, while
warmer weather led to a fall in the amount of gas and electricity remaining
customers were using.
The liberalised business also included the power generation portfolio
ScottishPower sold to Drax for £702m in October. This includes a giant
reservoir-based power generator in Argyll, the Lanark and Galloway
hydro-electric facilities on rivers in South West Scotland, and a biomass
fuel plant near Glasgow, along with four gas-fired power stations in England.
ScottishPower increased profits from its networks business to £813.4m, from
Wind power production increased by 9% in 2018, to 4,568 Gigawatt Hours
following the completion of a £650million investment programme to build
eight new onshore windfarms in Scotland. First power from the giant East
Anglia ONE offshore project is expected in 2019.
The parent Iberdrola group grew underlying profits (before interest, tax,
depreciation and amortisation) by 27.7% to €9.4bn (£8.2bn).
Scottish Power is raising its prices for customers on standard variable
tariffs by 10 per cent – £117 a year – meaning its standard plan for duel
fuel customers will cost on average £1,254.
A spokesperson for the group said yesterday: “We have been concentrating on
moving customers from standard tariffs for a number of years and have
amongst the lowest proportion of SVT customers of the large suppliers. This
has helped ScottishPower maintain a consistent position on customers.”
Scottish Gas is raising its prices by 10.5 per cent, which will see the
average dual fuel bill increase by £119.12 a year – costing the average SVT
customer £1,254 a year.