26th Mar 2008 07:00
Scottish & Southern Energy PLC26 March 2008 STATEMENT OF RENEWABLE ENERGY PLANS AND NOTIFICATION OF CLOSE PERIOD Scottish and Southern Energy plc ("SSE") has completed a review of its plans andinvestment opportunities in renewable energy following its acquisition ofAirtricity Holdings Limited ("Airtricity") on 15 February 2008. Tackling climate change and securing future supplies are the twin goals ofenergy policy in the UK, Ireland and throughout the European Union ("EU"). Inline with that, the EU has adopted a legally-binding target of 20% for theproportion of all energy to be derived from renewable sources by 2020. This willclearly lead to a dramatic increase in the amount of renewable energy that willbe required in the future. For the UK, that increase is set to be from 1.3% to15%; for Ireland, it is set to be from 3.1% to 16%. Against this background, SSE will continue to focus on enhancing and creatingvalue for shareholders from its energy and infrastructure related businesses inthe UK and Ireland and from the development of an international businessfocusing on renewable energy. Key Points • 2,000MW of renewable energy capacity milestone passed in March 2008 • New renewable energy target of 4,000MW for 2013 in UK and Ireland • Over £2.5 billion capital investment in renewable energy in UK and Ireland in five years to 2013 • Around £500m equity investment in renewable energy in new markets and technologies in five years to 2013 • Total investment programme over £6.5 billion in five years to 2013 2,000MW renewable energy capacity milestone passed in March 2008 SSE now owns and operates just over 2,000MW of capacity for generatingelectricity from renewable sources, comprising hydro electric schemes (includingpumped storage), wind farms and the UK's largest dedicated biomass energyfacility at Slough. The 2,000MW milestone was passed following the recentcommissioning work undertaken at a number of SSE's wind farms in the past fewweeks. Of this capacity, almost 1,800MW is in the UK, with the remainder beingin the Republic of Ireland. In addition, SSE has, in the UK and Ireland, just over 400MW of onshore wind andhydro capacity with full consent and/or under construction. It also has 545MW ofoffshore wind capacity with full consent in the UK and Europe. Looking ahead, SSE also has almost 1,000MW wind farm capacity in the UK andIreland which is at an advanced stage in the planning process. New renewable energy target for 2013 When it entered into the agreement to acquire Airtricity, SSE said it expectedto have over 3,500MW of operating renewable capacity in the UK and Ireland in2013. Following a comprehensive review of its renewable energy projects, SSE nowexpects this to be around 4,000MW. On this basis, it will double in five yearsits renewable energy capacity. While the achievement of this new target is subject to projects securing all ofthe necessary approvals in a timely manner, adequate electricity networkcapacity and the maintenance of a stable public policy framework whichencourages investment in renewable energy, SSE expects its portfolio in 2013will comprise: almost 1,500MW of hydro electric schemes; around 2,000MW ofonshore wind farms; over 250MW of offshore wind farms; and around 250MW ofwaste-to-energy and biomass developments. In addition, SSE is now pursuing onshore and offshore wind farm developments inEurope and onshore developments in China which could add well over 500MW to itsrenewable energy portfolio by 2013. Over £2.5 billion capital investment in renewable energy in the UK and Ireland The delivery of over 2,000MW of renewable capacity in the UK and Ireland by 2013is likely to require capital investment of over £2.5 billion in onshore wind,offshore wind and hydro electric schemes over the next five financial years,with investment currently expected to peak in 2010-11. This includes the fully-consented 504MW offshore wind farm development atGreater Gabbard off East Anglia, in which SSE currently has a 50% stake, and forwhich turbines have been reserved. SSE expects this development to proceedshortly and work on the first phase to get under way later this year. The investment profile for the next five years is subject to a number offactors, including constraints on the supply of wind turbines and the impact ofthose constraints on their procurement. Nevertheless, the overall supplyposition is expected to improve over the next few years, and SSE's enhancedposition as a wind farm developer following the acquisition of Airtricity shouldenable it to secure good value from suppliers. Around £500m equity investment in renewable energy in new markets andtechnologies In addition to its investments in the UK and Ireland, SSE is also expecting toinvest around £500m in renewable energy in new markets and technologies over thenext five years: onshore and offshore wind farms in Europe (principallyPortugal, Sweden, the Netherlands, Italy and Germany); onshore wind farms inChina; waste-to-energy; and marine energy in the UK and Ireland. This investmentwill largely be on an equity basis, with non-recourse debt expected to accountfor up to 75% of the total cost of the investment. In addition to its investment in technologies which have the scale to make asubstantial contribution to meeting energy needs in the near future, SSE alsohas a range of investments in emerging technologies. This includes a 13.3% stake in Solarcentury, the UK's leading independent solarphotovoltaics company, and is the company's preferred installer. SSE also has a50% stake in Aquamarine, the marine energy company which is developing wavepower and tidal power devices for comprehensive testing at the European MarineEnergy Centre in Orkney. Including Aquamarine, SSE has during 2007/08 committed to investing over £30m ina variety of emerging technologies designed to deliver secure, reliable andcost-effective low carbon energy systems. The most recent technology investmentmade by SSE is in the development of clean and reliable fuel cell-based combinedheat and power systems for the light industrial, commercial and residentialmarkets in the UK and Ireland via a joint venture with Intelligent Energy. Wider programme of investment SSE's investment in renewable energy will be part of a wider programme ofinvestment throughout SSE's electricity generation and networks businesses andits gas storage business which is currently projected to total over £6.5 billionover the five years to 2013. This includes the 840MW combined cycle gas turbine power station at Marchwood,near Southampton, in which SSE has a 50% stake, and which is on course to becompleted and in commercial operation in time for the winter of 2009/10. Close Period SSE is hosting a visit for analysts today at its Slough Heat and Power plant,focusing on renewable energy. It will enter its close period on Tuesday 1 April,prior to the publication on 29 May 2008 of its preliminary results for the yearto 31 March 2008. It expects to report results which are in line with theconsensus of brokers' forecasts. Ian Marchant, Chief Executive of SSE, said: "The decision earlier this month by the EU Council to adopt within the next yearbinding national targets for increasing the amount of green energy is just thelatest illustration of the long-term value in generating electricity fromrenewable sources. "The acquisition of Airtricity has given SSE a stronger platform from which todeliver renewable energy in the UK, Ireland and Europe - and in China as well.The range of investment opportunities in renewables which we now have willcontribute significantly to the growth of SSE over the next decade. "Our aim to grow our renewable energy capacity so significantly by 2013 isrealistic and achievable, but is inevitably subject to the maintenance of apolicy and planning framework that recognises the scale of the climate changeand energy security challenges which we will face in the coming years. "The logic for renewable energy is compelling and we have the commitment andfinancial strength to realise the opportunities that will flow from it -opportunities that were materially enhanced by the acquisition of Airtricity.SSE is on course to become an internationally significant player in therenewables sector, and this will support the achievement of our firstresponsibility to shareholders: building on our track record to continuedelivering sustained real growth in the dividend throughout the next decade." This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SSE