SCOTTISHPOWER has reported a 45 per cent rise in earnings in its retail business and a 22% increase in renewables earnings.
The Glasgow-based energy company, part of Spanish giant Iberdrola, said the £37 million increase in retail earnings were boosted by improved margins in gas storage assets at Hatfield Moor, near Doncaster.
The renewables earnings rise of £81m to £451m was mainly because of increased production as a result of windier weather conditions compared to the historically low levels in 2021.
The company said its renewables energy is typically sold up to two years before delivery “therefore current power prices have limited impact on 2022 results”.
The return to more favourable weather conditions for renewables coupled with the improved margins in gas storage has meant overall earnings for the nine months to September have increased 12%, or £139m, to £1.275 billion.
The improvement in earnings before interest, tax, depreciation and amortisation (Ebitda) in the liberalised retail business, which consists of domestic retail, or selling gas and electricity to UK households, business retail, smart solutions like installing heat pumps, solar panels to homes and its green hydrogen business, is “primarily gross margin related”, ScottishPower said.
READ MORE: ScottishPower accelerates green expansion
“Adverse retail gross margins, from lower volumes and continued price cap energy cost recoverability issues, have been offset by improved margins in gas storage assets up by £45m,” it said.
ScottishPower retail customer numbers at the end of September were 4.8 million, and total volumes against the prior year showed electricity down 1.1% and gas down 21.9%.
Keith Anderson, ScottishPower chief executive, said investment in green targets is significant.
“Renewables benefited from a return to more typical weather conditions following historically low levels across the industry last year,” said Mr Anderson. "Whilst the UK retail market continues to be challenging environment, the lower margins across the customer facing business have been offset by improvements in our gas storage assets.
“It remains the case that the way to tackle affordability and deliver energy security is to double down on electrification and ScottishPower continues to invest more than it makes every year on critical infrastructure to benefit society and deliver net zero.”
ScottishPower earlier suggested a government-backed fund to help energy firms place a meaningful cap on energy bills, while Iberdrola has come under criticism over dividend payments made amid energy cost disruption.
READ MORE: Windfall tax calls intensify as energy bills fuel inflation
Mr Anderson earlier intervened in the energy costs debate to say the country should “look to the lessons of the pandemic to offer support on the size and scale needed to see households through the worst of the pain this winter and over the course of the next two years”.
He said that the Government could set up a deficit fund to cover the difference between what people pay and how much it costs to supply their homes with gas and electricity.
“The fund could be underwritten by the Government, or a willing financial institution, and repaid over a 10 to 15-year period to smooth out the costs.”
In Iberdrola’s financial results for the third quarter of this year it has posted a profit of €3.1bn, up 29%, which was driven by strong international performance, mainly in the US and Brazil, and a 14 % increase in investments to €7.6bn, it said.
Ebitda increased by 17% to €9.53b, and operating cash flow reached €8.2bn, up 28%. New partnerships to boost clean energy include an Iberdrola link-up with Shell to boost floating offshore in the UK and with BP to promote 11,000 charging points in Spain and Portugal.
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