SCOTTISHPOWER has seen the profits it makes on the sale of energy to households fall sharply amid the surge in wholesale gas prices that has caused turmoil in the sector.
The Glasgow-based energy giant’s household supply arm made £83 million profit in the first nine months of this year, compared with £137m in the same period last year.
The fall partly reflects the impact of the rise in gas prices to record levels on international markets, which has been fuelled by the recovery from the pandemic.
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A series of energy companies have failed in recent months. Bills are set to increase for millions of householders next year if the regulator increases the price cap as expected to allow energy firms to recover some of the additional costs they are incurring.
Spanish-owned ScottishPower has the scale to cope with tough gas market market conditions. However, the fall in retail profits that it suffered also highlights another development that could have important implications. The company was obliged to buy more gas to meet its supply commitments because output from its renewable energy business fell.
Wind yields have been at the lowest levels recorded in decades across Europe.
Total profits made by ScottishPower’s renewables business fell around 17 per cent, to £370m, from £443m.
But as Glasgow prepares for the start of the COP26 climate summit in the city on Sunday, ScottishPower chief executive Keith Anderson said the energy crisis reinforced the case for renewables.
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Noting the likelihood of there being a difficult winter, he said: “ The energy price spike is a gas issue and a stark reminder to of why we have to decarbonise our energy sector quickly and efficiently.”
Mr Anderson said ScottishPower had shown it was prepared to maintain hefty investment in the clean energy infrastructure required to support the net zero drive. He noted the company had invested a record £10bn in five years on renewable energy projects and smart digital grid networks.
Last week ScottishPower committed a further £6bn to the giant East Anglia Offshore Hub, which Mr Anderson said was the company’s largest ever investment in a single development. It brought the 102-turbine development into operation last year.
ScottishPower made a total profit of £1.1bn in the first nine months, before interest, tax, depreciation and amortisation. That was down around £100m on the same period last year.
The division that operates energy networks increased profits slightly, to £0.65bn. ScottishPower noted revenues had increased as a result of colder 2021 weather. The impact of Covid-19 on demand was lower than in the same period last year.
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The retail business benefited from increased demand for both gas and electricity. It had 4.5 million customers at September 30, down from 4.7m at the start of the year.
The parent Iberdrola group saw profits fall by around 10% in the first nine months, to €2.4 billion (£2bn), from €2.68bn. It has operations in Europe and the Americas.
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