SCOTTISH Hydroelectric owner SSE is taking control of the Seagreen Wind Energy business in a £118m deal that reflects its confidence in the prospects for offshore renewables.
The Perth-based giant has agreed to acquire the 50 per cent stake in Seagreen held by American engineering firm Fluor to increase its holding to 100%.
SSE announced the investment as chief executive Alistair Phillips-Davies said the board regrets the group’s financial performance will be disappointing this year.
The group announced earlier this month that it expected profits for the six months to 30 September would be around half the level achieved in the same period in 2017, citing the impact of warm summer weather and increased gas prices.
“Well-intentioned decisions intended to mitigate commodity price risk to SSE's businesses through energy portfolio management will lead to a disappointing outcome in terms financial results in 2018/19, something the Board clearly regrets,” said Mr Philips-Davies yesterday.
SSE buys in supplies of gas and power from other firms as required to meet the demand from the customers it supplies with energy.
However, Mr Philips-Davies said directors had made good progress with efforts to reshape SSE to support long term growth with a focus on power generation and related infrastructure.
SSE received a boost on Monday when Total said it had made a significant find on a licence West of Shetland, which the utility has a 20 per cent stake in.
The group plans to merge its retail operation with npower to form a new standalone business.
The director of its wholesale business Martin Pibworth said: “The Seagreen acquisition aligns with SSE's ambition to create value from owning, operating and developing clean energy assets and infrastructure.”
SSE has invested heavily in developing renewable energy assets including offshore wind farms such as the £1.6bn Greater Gabbard complex off Suffolk, which it developed with Fluor.
The company said its share of existing offshore wind assets is significant in terms of volume and profit contribution, with Greater Gabbard and the Walney wind farm in the Irish Sea successfully operating since 2012.
The £2.6bn Beatrice wind farm in the Outer Moray Firth is expected to be fully operational from next year.
Mr Pibworth said SSE looked forward to taking full ownership of Seagreen as the venture passes through a critical phase.
Seagreen won consent from the Scottish Government in 2014 to develop two wind farms off Angus.
Earlier this month it applied for consent for an optimised plan based on fewer, larger, higher capacity wind turbines than currently consented. It said this would take advantage of advances in offshore wind turbine technology since 2014.
SSE intends to bid for support for the wind farms under the official Contracts for Difference auction it expects to be held in May.
The group said it also intends to develop further phases in the Seagreen area.
In a statement issued yesterday ahead of the company entering a closed period, SSE said it continues to expect the 2018/19 financial year to be one of transition.
SSE said earlier this month the price cap Ofgem has proposed to implement from 1 January will result in annual profits for the division that serves households being significantly lower than expected at the start of the financial year.
The group expects to complete the demerger of the retail arm by the end of its financial year on March 31. SSE shareholders will own 65.6% of the new retail business.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here