SSE buys wind farm in UK

Scottish & Southern Energy reported a 1.6 per cent rise in pre-tax profits and boosted its renewable energy capacity with the purchase of a wind farm project in the Humber region.

The group, which owns Ferrybridge coal-fired power station in West Yorkshire, bought the 34-turbine Keadby wind farm scheme in North Lincolnshire from Renewable Energy Systems Group for an undisclosed sum.

SSE said the wind project, which won planning consent in 2008, will have a capacity of 68-85 mega watts (MW) and provide enough green energy to power up to 47,000 homes once complete in 2014. SSE already has a gas-fired power station at Keadby.

SSE finance director Gregor Alexander said: “We have said that we will pursue both acquisitions and disposals in order to optimise our wind farm portfolio in the UK, and this acquisition of Keadby wind farm, which is SSE’s first consented wind farm in England, is completely in line with that objective.

“It adds to the diversity of our wind portfolio and the site’s proximity to our existing power station helps make this an appealing project to take forward to construction.

“As an established generator in the area, we have a long-standing commitment to the local community around Keadby, which will only be strengthened by this deal.”

SSE, which has the Southern Electric and Swalec brands, reported profits of more than £1.3bn, despite a drop in power use among its 9.16 million customers. It was the 12th year in a row SSE has lifted annual adjusted profits.

The group was helped by changes in electricity distribution prices following a regulatory review, offsetting higher-than-forecast wholesale gas prices and disappointing output from renewable energy and hydro electric schemes. Electricity consumption by households fell by 2.5 per cent, it said.

SSE added another 300,000 customers during the year, which chief executive Ian Marchant said was down to having “a good range of products… and a fair and responsible pricing strategy”.

British Gas owner Centrica recently warned of price hikes later this year. Mr Marchant declined to comment on where prices are heading, and said they are subject to the “vagaries of the commodity markets”.

However, SSE said that since announcing a December rise in household gas prices of 9.4 per cent, annual wholesale prices for electricity and gas have risen by around one quarter and one third respectively.

“Throughout this time, domestic gas supply was a loss-making activity for SSE and its gas supply business, Southern Electric Gas, has traded at a loss for most of the past few years,” the company added.

Audrey Gallacher, head of energy at Consumer Focus, said: “Hard-pressed consumers will be grinding their teeth in frustration as the second of the Big Six hints at price rises while reporting increased profits.

“Customers simply don’t have faith that they are being asked to pay a fair price and Ofgem has shown this lack of trust has firm foundations.”

SSE said its coal-fired power stations had only 84 per cent availability over the year, compared with 92 per cent the prior year. This was in part down to “technical issues” at Ferrybridge, it said.

The plant, near Castleford, last year won £6.3m from Government to help fund a clean coal trial, which is due to start later this year. The trial will capture carbon after combustion and claims to be Europe’s largest post-combustion carbon dioxide capture trial.

The Ferrybridge trial is one of a number of carbon abatement projects planned for the Yorkshire and Humber region, with other schemes mooted for Selby, Hatfield and Killingholme.

SSE is also developing a waste-to-energy plant at Ferrybridge in a joint venture with Shanks. The 3SE project was last month named preferred bidder for waste from Barnsley, Rotherham and Doncaster council areas. If it gets the go-ahead, the multi-fuel facility will use mainly waste-derived fuels to generate around 65MW of energy.

The company raised its dividend by 7.1 per cent to 75p a share, in line with plans announced last year to hike the pay-out by at least two per cent above inflation for the subsequent three years.

SSE said the results performance demonstrated its resilience in testing economic conditions.

It added: “Despite the challenges, SSE has delivered sector-leading service to energy customers and maintained a strong record of reliability in energy networks.”