Scottish Power expects market to ‘remain challenging’

Figures released by Scottish Power show all its business areas are “performing in line with expectations” in the first half of 2018, according to its chief executive.

Keith Anderson said “excellent progress” has been made on delivering wind generation such as the 714MW East Anglia One project which is expected to produce power next year.

But the figures show that despite a recovery from a poor 2017 performance the generation and supply arm remains down 19 per cent from £205.9 million on the same period in 2016.

Last year the company lost around 200,000 customers which was one of the reasons behind a dip in the profits of its retail arm.

Earnings before interest, tax, depreciation and amortisation (Ebitda) for generation and supply in 2018 were up 306 per cent (£165.8 million) compared to H1 of 2017 (£40.8 million).

In the first half of this year average customer consumption increased by 4 per cent which is mainly due to the cold weather in the first quarter. Across the full year in 2017 Scottish Power’s margin for supplying gas and electricity was -0.3 per cent. This year the company is seeking to deliver a margin in the region of four 4 per cent, in line with a “typical year” and other retail sectors.

There has been a dip in the number of customers from the end of Q1 which saw numbers fall slightly from 5 million to 4.9 million.

Keith Anderson, Scottish Power’s chief executive, said: “All of our business areas are performing in line with expectations. Our investment in onshore wind last year has seen an increase in electricity generated, and excellent progress has been made on delivering the £2.5 billion East Anglia One project. We expect first generation of electricity next year.

“Networks also continues to see major investment. We are delivering a smarter and more robust grid system to support renewable energy connections, as well as planning for the anticipated increased uptake of electric vehicles in the years ahead.

“Generation and supply has improved on the poor results in 2017, moving towards a more typical year. We expect further details on the proposed price cap in the second half of the year and expect the market to remain challenging.”

Meanwhile returns for SP Energy Networks (SPEN) continue in line with expectations against “record levels of investment”.

A total of £3 billion in the period 2015 to 2023 is being delivered by the RIIO-ED1 distribution investment programme, with £2 billion being delivered the RIIO-T1 transmission programme between 2013 and 2021.

Since the start of RIIO-T1 over 1,360 MW of new renewable energy has been connected and seven new windfarms generating a total of 489MW have been connected to SPEN’s transmission network during H1.

Five of the windfarms were connected to a recently completed 80km section of network in south west Scotland as part of a £260 million project. This required 1.1 million tonnes of stone for foundations and 86km of new access roads.

The Ebitda for SPEN totalled £399.9 million, up 3 per cent compared to £388.0 million in H1 2017.

Scottish Power Renewables saw wind power production increase to 2,404 GWh which is 15 per cent higher than the first half of 2017. This follows the completion of a £650 million investment programme to build eight onshore windfarms in Scotland.

Ebitda for Scottish Power renewables totalled £205.1 million, up 27 per cent compared to £161.6 million in H1 2017.