Energy provider SSE has delivered a blow to the UK’s offshore wind sector after admitting it was cutting investment due to a lack of confidence.
The company said today it would cut its stake in the giant Beatrice wind project in the Moray Firth from 75% to 50%, and that it was exiting the Galloper offshore development as it did not believe the project was cost effective.
It is also to exit the Seagreen project in the Firth of Forth, and Forewind development planned for Dogger Bank, once enough development work has been secured for construction work to begin.
The announcement comes as the energy group confirmed it was looking to make cost savings of around £100million and cut 500 jobs across the country.
“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,” said SSE’s managing director for generation development, Jim Smith.
“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.”
The Perth-based company said it would decide by the end of the year whether to commit further resources towards the £3billion Beatrice project in a bid to make a final investment decision in 2016 – but that extra investment would only be committed if a contract for difference had been secured with the Government and if SSE has brought its stake down in the project.
SSE warned in its report that it “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”.
The company had warned earlier this year that investment prospects in offshore wind were ‘not encouraging’, while ScottishPower shelved plans for the giant Argyll Array project off Tiree.
Green energy bodies said the decision by SSE to scale back their investment in offhsore wind underlined the doubt over the industry.
“These decisions reinforce the uncertainty which developers have about the future of the offshore wind sector, and reinforce that continued, strong support from both the Scottish and UK Governments is absolutely critical to the future of the industry,” said Lindsay Leask, Senior Policy Manager at Scottish Renewables.
“In turn, the sector needs to continue to work hard to deliver cost reductions which will further prove that offshore wind is an economic alternative to other forms of generation.
“However, we should not forget that we continue to have plans for five major offshore wind farms off Scotland’s east coast, which could provide a significant economic boost to Scotland and businesses across the country, as well as making a massive contribution to cutting carbon emissions.”
RenewableUK’s Chief Executive, Maria McCaffery, said the announcement showed a need for the Government to offer greater confidence for green energy investors.
“If we could rely on more certainty and less risk, firm commitment to the huge financial investments involved would secure all the economic benefits of energy independence in a shorter timescale,” she said.
“As the SSE announcement makes clear there are some aspects of policy which are troubling developers, so policy makers should take notice. The lack of clarity about the Government’s support for offshore wind past 2020 is in stark contrast to its support for nuclear where they’ve set out a clear package of financial support.”
SSE confirmed it was to split off its wholesale and retail operations into separate units and freeze energy prices until January 2016 in a bid to quell public anger over the high price of bills.
“We’re making sure our own house is in order for the future by streamlining and simplifying our business, and we’re making clear we wish to work with people to find more ways of taking costs out of energy bills,” said SSE chief executive Alistair Phillips-Davies.
“In all of this, I hope that people will see a company like SSE not as part of the problem but as part of the solution.”
Recommended for you
