SCOTTISHPOWER owner Iberdrola has doubled profits in its UK wind power business in the first nine months of its financial year.
Earnings before interest, tax, depreciation and amortisation (EBITDA) in the Spanish company’s UK renewables business leapt to €301 million (£221m) in the first nine months of 2015, from €150m in the same period of last year. This more than offset a sharp fall in profits in Iberdrola’s UK supply and generation division.
The doubling of earnings in the UK renewables business was driven by better wind conditions and additions to the wind farm portfolio. The euro-denominated earnings figure was also boosted by sterling’s appreciation against the single currency.
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The 389-megawatt West of Duddon Sands offshore wind farm in the East Irish Sea off Cumbria, a joint venture between ScottishPower and Dong Energy, was opened last autumn.
A ScottishPower spokesman noted that about a further 500MW of wind farm capacity was currently under construction, including projects in South Ayrshire and an extension to the Black Law site in Lanarkshire.
ScottishPower has the biggest onshore wind farm in the UK, at Whitelee on Eaglesham Moor south of Glasgow. This wind farm has 215 turbines, capable of generating up to 539MW of electricity.
Iberdrola said that the UK supply and generation business made EBITDA of €250m in the first nine months of this year, down by 17.8 per cent on the same period of 2014. This unit takes in the UK retail energy supply business, and electricity generation other than that from wind farms.
The company said that this fall in earnings was principally because of the “significant impact” on gross profit margin of the carbon tax, and the increased cost of Renewable Obligations Certificates and the feed-in tariff in the retail business, with generation from coal also down 20.8 per cent.
ScottishPower announced in August that its coal-fired Longannet power station in Fife would close next March, citing the cost of connecting to the grid.
Keith Anderson, chief corporate officer at ScottishPower, declared that, with coal-fired power generation now “uneconomic”, the priority was to have a UK Government framework to bring on a new generation of gas power stations.
The surge in earnings from the UK renewables business helped Iberdrola achieve a rise in overall profits for the first nine months of 2015.
Iberdrola made EBITDA of €5.43 billion in the first nine months of 2015, up by 5.8 per cent on the same period of last year.
Net profits, at €1.92bn in the nine months to September, were up by 7.8 per cent on the corresponding period of 2014.
Mr Anderson said: “Iberdrola’s third-quarter results show that onshore and offshore wind can be significant contributors to the UK’s generation mix, but with coal power generation now uneconomic given the impact of Government obligations, the priority should be for a Government framework that enables investment to steadily realise a new generation of gas power stations to provide base load.”
While seeing no need for a reversal of the UK Government’s planned reduction in support for wind power, noting that costs of putting in place onshore capacity had fallen dramatically, Mr Anderson has called for “certainty for investment” and declared this has been lacking.
ScottishPower also announced the award of 13 contracts, with a total value of £196m over four years, to deliver maintenance and upgrade works on its overhead power line networks in central and southern Scotland, Merseyside, and north Wales.
It said these contracts would support 400 jobs, creating 150 new trainee posts through SP Energy Networks’ partnerships with Dumfries College, Forth Valley College, and Coleg Menai in Wales.
Iberdrola said its investment in ScottishPower was still scheduled to be a record £1.3bn in 2015. It added that most of this investment was in major upgrades of power transmission and distribution networks in Scotland, north-west England, and north Wales.
EBITDA at the ScottishPower networks business rose to €821m in the first nine months of 2015, from €727m in the same period of 2014.
Iberdrola said SP Energy Networks has benefited from 55 per cent of its global investment in networks. It added that ScottishPower Renewables had benefited from 68 per cent of Iberdrola’s global investment in renewables.
Mr Anderson said: “Our record annual investment of £1.3bn remains on track and the new contracts awarded will support our ambitious programme to deliver some of the most significant upgrades to our network in more than half a century.”
He added: “Between now and 2023, we are investing more than £4bn in total, further improving reliability for our customers and making our network more resilient to extreme winter weather. We also need to encourage a new generation of technicians and engineers into our industry, so it is great to see 150 new trainees coming in…as part of these contracts.”