Annual profits fell across the board at all three main divisions of UK Big Six energy company Scottish Power last year.
Pre-tax profits (EBITDA) in its UK renewable energy generation division fell 31% to £218.5 million in 2016, down from £318.1 million in 2015, largely driven by a 17% drop in production.
While last year (2015) was a record year for wind power generation at 3,710 GWH for the division, the 2016 production of 3,098 GWH was on par with wind power production in 2014 (3,110 GWH).
In the company’s Generation and Supply division, pre-tax profits (EBITDA) fell to £240.3 million – down 21.5% from £306.2 million in 2015.
The Energy Wholesale business increased. Whilst overall plant production fell following the closure of the coal-fired Longannet plant in March 2016, operating costs improved.
The reduction in the Retail business is influenced by lower gas and electricity sales due to the warmer weather. In addition, whilst domestic revenue and energy prices fell in 2016, non-energy costs increased by £75 million year on year.
Although Scottish Power’s UK Networks division performed better, pre-tax profits (EBITDA) dipped by 3.3% to £799.1 million last year, compared to £826.4 million the previous year. This was mainly due to the anticipated revenue profile as part of the new regulatory framework for the distribution network (RIIO ED1), which came into force in April 2015.
Scottish Power Chief Corporate Officer, Keith Anderson, said: “2016 was a challenging year, but even amidst future uncertainties in global markets, we can continue to deliver on our planned investment programme – so long as stable regulatory frameworks remain in place.”
Meanwhile, Scottish Power Energy Networks is scheduled to complete the Western Link project this year in partnership with National Grid.
This £1 billion project will see more than 380km of subsea high-voltage DC cables installed and connected between Hunterston in Ayrshire and Deeside in North Wales, which will increase the interconnection between Scotland and England by 2,200 MW.
It will take renewables from between the two nations, and bring power the other way when required.
In renewables, work will also start on this Spring on Scottish Power’s East Anglia-1, 102 turbine, 714 MW project in the southern North Sea.
And the Wikinger Offshore Windfarm, a 70-turbine 350-megawatt project in the Baltic Sea, will be completed during 2017. All foundations are now installed, and towers are currently being erected.
Wikinger is the first solely-owned offshore windfarm for the group which is managed by Iberdrola Group’s Global Offshore Wind head office, which shares the Scottish Power building in Glasgow.