Hot weather hits SSE's power generation

Times

5 days ago

Hot and dry weather in the UK affected output at SSE's hydroelectric plants, which was down by about 40 per cent in the quarter to the end of June.
The 'unfavourable weather conditions across April and May' contributed to a 4 per cent overall drop in SSE's renewable energy generation compared with the same period of the previous year.
The fall in output from its conventional hydroelectric plants and a 34 per cent decline in output from its pumped storage hydro plants were partially offset by a 15 per cent rise in onshore wind generation, while offshore wind output was down 1 per cent.
The wind figures include output that SSE agreed to sell but was then paid not to generate by the National Energy System Operator because of network bottlenecks.
Some of the company's offshore wind farms and its Viking onshore wind farm on Shetland have drawn criticism for a high proportion of their output being 'constrained', and the costs levied on consumer bills.
SSE said that its full-year expectations remained unchanged despite the unfavourable weather in the first quarter, with 'the key winter months still to come'.
SSE is a FTSE 100 energy group that operates electricity transmission cables in the north of Scotland and distribution networks in Scotland and central southern England. It also has a fleet of power plants comprising wind farms, hydro plants and gas-fired power stations.
The group operates eight hydro and pumped hydro schemes in Scotland and is aiming to build a new pumped hydro scheme at Coire Glas.
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Scottish Water said in May that it had been the driest start to the year across Scotland since 1964, with only 59 per cent of long-term average rainfall between January and April, and May even lower for most of the country. That left reservoir levels below their average for the time of year.
The Met Office has said that Britain is seeing the effects of climate change, with drought declared in several areas after repeat heatwaves and that the UK's climate is now 'notably different to what it was just a few decades ago'.
Jenny Ping, an analyst at Citi, said that 'onshore wind and hydro load factors have consistently fallen across SSE's renewable portfolios over the last decade'. She had previously said that it was not clear whether that was 'due to shift in weather patterns or reflects ageing assets'.
Ping added on Thursday that Citi was awaiting updates from SSE on capital allocation and how it will fund its growth, but that a strategic update was likely to be in November at the earliest and potentially not until full-year results in May next year.
SSE has received some clarity for its portfolio of late after the government ruled out zonal electricity pricing, which it had strongly opposed. The proposed shift to regional pricing could have restricted constraint payments for wind farms and could have reduced the need for new transmission cables in Scotland.
Two big moments are looming for the company, however. The government's next subsidy auction for renewable power projects is expected in the coming months, in which SSE is expected to bid for contracts for a number of proposed wind farms.
A final Ofgem decision on the regulated spending plans for its electricity transmission network is expected by the end of this year after SSE criticised the draft decision for allowing too little expenditure to 'fund the investment necessary to deliver a clean power system by 2030' and offering investor returns that it argued were 'not commensurate with globally competitive market rates, robust market evidence, and the significant business risks of investing in electricity transmission'.