12th Jul 2006 07:01
Scottish & Southern Energy PLC12 July 2006 SCOTTISH AND SOUTHERN ENERGY VENTURE TO INVEST IN NEW COMBINED CYCLE GAS TURBINEPOWER STATION Scottish and Southern Energy plc ("SSE") has entered into an agreement with ESBI(Ireland's ESB International) to acquire 50% of the shares in Marchwood PowerLtd, in anticipation of the construction of a new gas-fired power station nearSouthampton with an installed capacity of around 850MW. The site at Marchwood has consent under Section 36 of the Electricity Act forconstruction of the power plant. When operational, SSE will supply all of thefuel for the power station and take from it all of the electricity generated.The power plant will be constructed under a turnkey contract and a long-termmaintenance agreement entered into with Siemens, the preferred gas turbinesupplier. SSE and ESBI will each have 50% of the shares in Marchwood Power Ltd. It will befinanced on a non-recourse basis, with a likely debt/equity ratio of 80%/20%.The total project cost is estimated to be around £400m, which means that SSE'sequity investment in the venture is likely to be around £40m. The development is subject to the securing of non-recourse finance and thefinalisation of a power purchase agreement, which will determine issues such ashow the plant is to be operated and how it is to be remunerated for beingavailable to generate electricity. SSE and ESBI aim to achieve financial closeby the end of 2006. Construction work is expected to start early in 2007, with the power stationbeing fully commissioned before the winter of 2009/10. Upon completion, thestation will be jointly operated by SSE and ESBI. It will have one of thehighest thermal efficiencies of any power station in the UK and in a typicalyear will meet the electricity requirements of around one million homes. Ian Marchant, Chief Executive of SSE, said: "There is a clear consensus that theUK will need a significant amount of new electricity generation capacity overthe next 15 years. At SSE, we have long recognised that adding to ourleading-edge generation portfolio is a key means of helping to deliver reliableenergy supplies and creating value for shareholders. "This agreement is a major step forward in our ambitions to invest further ingas-fired generation plant, which will complement our other investments in gas,in coal-fired plant and in renewables. It will help SSE retain its position asthe largest non-nuclear generator in the UK, and the generator with the mostdiverse portfolio of power stations. It will also help to keep the UK's lightson. "Following the announcement in May of our proposals to develop cleaner coal atFerrybridge, and our ongoing work in renewables, this investment in gas-firedplant will complete the process of balancing our investment in electricitygeneration." The UK's Minister for Energy Malcolm Wicks MP said: "A major part of our energyreview was about enabling the power industry to deliver reliable and lowercarbon energy supplies for the UK over the long term. This announcement by SSEand ESBI confirms that there is a significant appetite to invest in energy inthe UK and is a very welcome development." Ireland's Minister for Communications, Marine & Natural Resources, Mr NoelDempsey, T.D, commented: "I warmly welcome the announcement of the joint venturebetween ESBI and SSE in Marchwood in the UK. This agreement is further evidenceof international confidence in the experience ESBI has gained through itsoperations both in the UK and worldwide." Enquiries to: Scottish and Southern EnergyAlan Young, Director of Corporate Communications 0870 900 0410Denis Kerby, Corporate Communications 0870 900 0410 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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