ENERGY giant SSE has attracted some unwelcome attention in recent weeks as the firm tries to ward off an unhelpful regulatory intervention.
Ofgem sparked outrage among firms that operate the UK’s energy networks including SSE in July when it proposed to curb the returns they can expect to generate on investment at around four per cent.
However, energy firms claimed the proposals could force them to cut their investment plans in a way that would undermine the green recovery the country needs to encourage.They stepped up their calls for Ofgem to think again last week ahead of the close of the consultation process on Friday. Ofgem gave no indication that it would relent.
On Wednesday it announced that SSE had been fined £2.06 million for failing to publish inside information about the wholesale energy market in a case that dated from 2016.
While the breach Ofgem identified seemed to concern an arcane matter the regulator insisted it “ was likely to have had a significant effect on forward wholesale electricity prices”.
SSE said it had acted in good faith and had not benefited from the action that Ofgem had found fault with. It suggested that regulatory authorities needed to provide additional guidance for market participants.The affair, however, generated noise that was probably unhelpful.
It came weeks after Ofgem announced that Ovo will make a voluntary payment of £1.2m to its consumer redress fund in respect of a historic issue concerning the household supply business it bought from SSE in January. Ofgem noted SSE Energy Services had failed to meet its smart meter installation target for 2019, before it was acquired by Ovo.
The smart meter scheme was meant to help cut carbon emissions and consumers’ bills but has been a costly flop.The rate of installations has lagged well below the targets set by the Government. The costs are paid by consumers through their bills.
The main beneficiaries appear to be firms that specialise in installation work – such as Glasgow-based Smart Metering Systems – and the investors that own them.
After quitting the retail business through the Ovo deal, SSE does not have to worry about meter installation targets any more. News of the 2019 underperformance, however, did not help efforts to persuade consumers that energy firms have been playing an effective role in support of the drive to cut emissions.
SSE might respond by highlighting the scale of the investment it is making in developing renewable energy assets such as windfarms.
Last week it announced revised proposals to develop the Strathy South wind farm in the Highlands. SSE is seeking approval for a scheme that will feature 39 turbines with a maximum height of 200 metres, against 135 metres in the original plan. It said the revised Strathy South would be expected to produce enough green electricity to power over 315,000 homes and make a vital contribution to Scotland’s net zero carbon reduction goals.
Local businesses and communities are expected to benefit, during the construction and operational phases. SSE said 53 jobs would be likely to result. That number may be relatively significant in the local context but not high enough to encourage hopes the green energy revolution will generate enough jobs to offset cuts that are being made by hard-pressed oil and gas firms.
It will be years before some big windfarms that are in the pipeline are operational.
SSE said recently the giant Viking windfarm it plans to develop on Shetland will support up to 35 skilled jobs when it is operational. That may not be until 2024.
Last month SSE awarded the contract to make and install the 103 turbines for Viking to Vestas of Denmark.Vestas said yesterday that it has not been decided yet where the turbines for Viking will be made.
In June a joint venture between Vestas and MHI was appointed to produce 114 turbines for the Seagreen windfarm SSE and Total plan to develop off the Angus coast. MHI Vestas said it would make the turbines on the Isle of Wight.
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