In its investor update yesterday Scottish and Southern Energy’s statement also contained a shock u-turn on four flagship wind-turbine renewable energy projects – which have now been halted.
While confirming it will continue with its joint venture partnership with Repsol in their Beatrice offshore wind farm in the Moray Firth, SSE also announced that is stopping work and/or halting investment in the Galloper, SeaGreen, Forewind and Islay projects.
Jim Smith, Managing Director, SSE Generation Development, said: “In offshore wind farm development, there are two major, related hurdles that projects currently have to overcome. The first is the Levy Control Framework, which has the reasonable objective of controlling costs to customers from government energy policies – but which also means there is limited support for offshore wind.
“The second is cost – the future of offshore wind farm development depends on a sustainable and lower cost supply chain.
“Having looked across our offshore portfolio, and across our capital and investment programme as a whole, we believe that we should focus our near term development activity on Beatrice. Taking it forward to subsequent stages of development and construction will be challenging, but achievable, and that is what we are working towards.
“While increasing our commitment to the development of Galloper, SeaGreen and Forewind is not the right option for SSE at present, in the context of our wider investment plans, we will continue to work with partners and other stakeholders to achieve the most positive possible outcome for each project.”
Scottish Energy Minister Fergus Ewing, MSP, said: “While we welcome SSE’s confirmation that it will proceed with investment in recently consented Beatrice offshore wind development, we are clearly concerned that uncertainty over future investment conditions and returns has led company to place other renewables developments on hold.
“Scotland’s huge offshore renewables resource will have a major role to play in meeting future UK energy needs – but UK Government’s half-hearted and delayed reforms to energy market are a serious threat to the vital investment required.”
SSE explained these decisions as follows: –
We have decided not to take beyond the current phase of development our interest in the Galloper project (340MW, a 50:50 partnership between SSE and RWE Innogy). SSE does not currently believe that the costs of constructing and operating Galloper, and the revenue likely to be earned from it once built will provide a return on SSE’s capital investment that will enable the project to compete successfully.
Round 3 – SeaGreen and Forewind
SSE currently participates in the development of two of the projects allocated under The Crown Estate’s Round 3 site allocation process:
- SeaGreen (3,500MW), a 50:50 partnership between SSE Renewables and Fluor Limited, which has submitted consent applications to Marine Scotland for two wind farm areas in the Firth of Forth with a capacity of 525MW each in the 3.5GW Firth of Forth zone; and
- Forewind (7,200MW), a four-way partnership with RWE Innogy, Statoil and Statkraft, which has submitted a consent application to the Planning Inspectorate for two wind farm projects of up to 1,200MW each on Dogger Bank
SSE does not plan to extend its commitment to the projects until it has achieved sufficient confidence in the viability of the wider offshore wind sector.
SSE had proposed to develop a 690MW offshore wind farm off the coast of Islay and while it will continue to work with other stakeholders in relation to the development, it will not be investing further in the project in the foreseeable future.
A wind-ustry source told the Scottish Energy News that “the sector clearly needs to continue to work hard to deliver cost reductions to further prove that offshore wind is an economic alternative to other forms of generation. “