Scottish Power chief tells Brit-Govt to fix electricity capacity market to get new-build gas power stations

The British government needs to re-calibrate the market if it wants electricity supply companies to build new thermal power stations.

The head of Scottish Power – one of the Big Six gas and electricity providers – issued this call after profits slumped by 76% in the company’s generation and supply division.

In the first half of this year, it reported pre-tax profits of £48.8 million – compared to £205.9 million in the same period last year.

In its interim results, the Spanish-owed company said: “The Generation and Supply business has been impacted by milder weather conditions in the first half of 2017. In Retail, domestic power sales were down by approximately 7% and domestic gas sales down by around 8%.

Thermal generation in the United Kingdom also fell by 40% during the first half of 2017 to 3,581 GWh, compared with 5,923 GWh in the previous year – due largely to the closure of Longannet Power Station.”

Keith Anderson, Chief Corporate Officer at Scottish Power, said: “The closure of Longannet in March 2016 coupled with milder weather in the first half of the year has influenced the year-on-year figures for Generation and Supply.

“In Thermal Generation, UK returns remain tight highlighting the need for reforms to the capacity market auction process. 

“The next auction urgently needs to deliver new large-scale gas plant. The economics need to be right for investors to build this much needed new plant.”

Meanwhile, pre-tax profits in the Glasgow-based company’s Renewables division rose 32% to £153.7 million in the first half.

Onshore wind production increased to 1,701 GWh, 43.8% higher than that recorded in the first half of 2016.

This is driven by a mixture of better wind conditions, and also increased capacity, as a £650 million project to install eight new onshore windfarms has progressed.

Offshore wind production also increased by 13.9%, amounting to 387 GWh, driven by better wind conditions.

Anderson added: “Our Renewables business has performed well and we have seen increased production across both onshore and offshore wind.

“As well as progressing the construction of the East Anglia-1 offshore windfarm in the second half of the year, we also hope to have a planning decision on the proposed 1,200MW East Anglia-3 offshore wind project later in the summer.”

Swiss-based power components manufacturer ABB has won a $30 million order from Scottish Power to supply two SVC Light® Static Compensators to enable voltage stabilisation and enhanced power quality for its East Anglia-1 windfarm.

Profits at Scottish Power’s parent Iberdrola group rose by 4% after tax to €1.518 billion in the first half of 2017.

21 July 2017