SSE to ‘reshape’ portfolio towards cleaner capacity

SSE will react to the changing UK energy landscape by reshaping its asset portfolio in favour of its cleaner, more flexible generation capacity while mulling the future of 3GW of coal-fired capacity.

The big six supplier said in its latest financial report that it plans to ‘reshape significantly’ to meet the challenging market conditions which face conventional generators as the sector decarbonises, including greater investment in gas-fired power assets and a possible shutdown of its remaining coal plant.

SSE will bring its 735MW gas-fired power station at Keadby out of deep mothball, so that it has the option of returning it to service, it said.

Although generator profits have been squeezed in recent years gas-fired power plants have emerged as profitable options for generators looking to secure supply and balancing contracts with National Grid.

SSE’s plans include further investment in its Peterhead gas-fired power plant, which recently clinched a contract with National Grid for voltage control services over Scottish Power’s Longannet plant. SSE said it will pursue further supplemental balance reserve (SBR) contracts with the system operator following its role on the SBR bench over the past winter.

But as SSE drives investment towards its flexible gas-fired capacity it will carry out a longevity assessment of its remaining coal-fired generation capacity at the 1GW Ferrybridge and 2GW Fiddler’s Ferry plants, it said.

In addition, the company said it will mothball 35 per cent of its gas storage capacity from its Hornsea gas storage facility as early as 1 May this year due to the costs of operating, maintaining and upgrading the older withdrawal plant.

Generation profit margins have been squeezed in recent years as subsidised renewable energy weighs down the wholesale price of electricity, while while carbon costs continue to rise.

“[O]ur assessment of market conditions in generation has highlighted the need to take a series of decisions with regard to plant that are likely to reshape significantly our portfolio,” SSE finance director Gregor Alexander said.

“The challenges are unlikely to abate in the new financial year,” Alexander said, adding that the upcoming UK general election and the ongoing CMA market investigation provide opportunities to achieve “greater regulatory and policy stability”.