Latest news with #Phillips-Davies
The Herald Scotland
3 days ago
- Business
- The Herald Scotland
Hopes of big green jobs boost for Highlands and Argyll fade
However, the projects have been cast into uncertainty after cost increases and concerns about issues such as planning consents weakened the commercial appeal of schemes that would entail hefty upfront investment. Perth based SSE has held out the prospect the Coire Glas development could store enough power for three million homes. It would work by harnessing the power generated by the flow of water between two reservoirs that SSE plans to develop by Loch Lochy. The company would use power generated by windfarms in times of low demand to pump water into the upper reservoir. When demand increases the water will be allowed to flow into the lower reservoir turning huge turbines in the process. Drax has developed a plan to double the capacity of the massive Cruachan Hollow Mountain facility in Argyll, which would involve hollowing out spaces in which it would install more turbines. READ MORE: SNP Government oil hypocrisy shocking amid Scottish jobs cull Israeli-owned firm takes control of UK's biggest gas field The companies have claimed the schemes could provide vital support for the renewables revolution by tackling the problem caused by the fact that the UK does not have enough capacity to store renewable energy or transport it to centres of high demand. But in its annual results SSE said it planned to reduce its investment budget by £3 billion, to £17.5bn, citing the challenges posed by the macro environment and planning issues. Chief executive Alistair Phillips-Davies said a range of projects including Coire Glas would be delayed as a result. Mr Phillips-Davies said the giant Berwick bank windfarm development off Scotland had also been delayed, as a long wait for the Scottish Government to provide planning consent drags on. He complained to reporters that the scheme has been on ministers' desks for about three years. The announcement by SSE came a fortnight after Drax announced that the Cruachan expansion project had been put on hold following a significant rise in costs. The statements leave huge uncertainty hanging over projects that were expected to provide a badly-needed boost to flagging hopes that Scotland will enjoy a green jobs boom. The number of jobs created has fallen well short of expectations, partly because windfarm developments require relatively few people to complete. Coire Glas and the Cruachan expansion scheme would be unusual in featuring large scale construction work. SSE has completed some preparatory work for the Coire Glas development by Loch Lochy (Image: SSE) Experts have highlighted the fact Scotland urgently needs to accelerate the pace of green job creation amid turmoil in the oil and gas sector. There are fears that firms could cut hundreds of jobs in response to the Labour Government's decision to increase the windfall tax rate in its first Budget. In a report issued today Robert Gordon University says the UK oil and gas energy workforce could shrink by approximately 400 jobs every two weeks for the next five years – the same number lost as a result of the closure of the Grangemouth refinery – unless governments take urgent action. It notes: 'Before 2027, there is likely to be limited capacity for the UK offshore renewables sector to host and accommodate the quantity of oil and gas workers becoming available on the job market.' Oil and gas industry leaders are mounting a last ditch bid to persuade chancellor Rachel Reeves to provide relief when she announces the results of her Comprehensive Spending Review on June 11. Offshore Energies UK said the Government should bring forward the date for the ending of the windfall tax to 2026 from 2030. The trade body claimed: 'Independent data from the Office of National Statistics confirms that the profits for those investing in the UK oil and gas sector have fallen to negative levels, but the tax remains - holding back vital investment across the UK's energy landscape.' READ MORE: North Sea giant eyes major expansion move as oil and gas job losses mount Just transition furore reignited as Scottish Government flounders OEUK chief executive David Whitehouse said the UK needed the output of the oil and gas industry and the support firms could provide for the development of green energy sources. 'The sector needs action now to secure jobs, boost energy security, and build for the future. That means a commitment from government to deliver a mechanism in 2026 that creates a predictable response to future price shocks,' declared Mr Whitehouse. 'This is what is needed to unlock investment in UK energy - oil, gas, renewables, hydrogen, and carbon capture.' But SSE and Drax made clear they will only proceed with big pumped hydro storage projects if tough conditions are met. SSE chief executive designate Martin Pibworth noted the company is in talks with Ofgem about the cap and floor mechanism the regulator has proposed to guarantee firms a minimum price for the output from pumped hydro storage schemes. Regarding Coire Glas, he said: 'We will only progress if we are convinced we have a solid remuneration contract with appropriate risk-adjusted returns.' Drax said: 'We will not be entering the forthcoming Cap & Floor application process while we evaluate the investment case for the [Cruachan expansion] project.' The bad news from SSE about Coire Glas and Berwick Bank will compound the disappointment caused by the company's decision to shelve plans for the Bhlaraidh windfarm extension in the Great Glen because bosses did not like the look of the 'risk-return profile'. But SSE will still spend heavily on growing its renewables generating capacity in the expectation that it will generate strong returns on investment in favoured projects. Mr Pibworth said: 'The vast majority of this growth will be delivered by the first two phases of Dogger Bank [off Yorkshire] and well-progressed onshore and battery projects.' He highlighted the value of the support the favoured projects will get under UK Government schemes such as the Contracts for Difference (CFD) programme - the costs of which are added to household energy bills. 'Crucially, these investments are underpinned by long-term government-backed contracts such as CfDs or the capacity mechanism, providing price certainty and inflation protection for the vast majority of volumes produced,' said Mr Pibworth. SSE said it championed a fair and just energy transition, as it posted a near £2bn operating for the latest year, The company said it supports 62,000 jobs in the UK and around 5,200 in Ireland. But householders who are grappling with high energy bills may wonder who will be the biggest beneficiaries of SSE's investment in renewables. The company expects to reward shareholders with inflation-busting increases in dividend payments of up to 10% for the next two years.
Business Mayor
22-05-2025
- Business
- Business Mayor
Blow to UK's 2030 clean energy targets as SSE cuts spending on renewables
One of the UK's biggest energy developers will cut its planned spending on new renewables projects in a blow to the government's 2030 clean power targets. SSE warned that it would be unlikely to meet its own renewable energy goals for the end of the decade after shrinking its five-year spending plans by £3bn to £17.5bn. The spending cuts will include investing £1.5bn less on developing renewable energy initiatives, including offshore windfarms and a hydropower project, with another £1.5bn cut from its planned spending on other energy and transmission projects. SSE's outgoing chief executive, Alistair Phillips-Davies, blamed 'delays to policy and planning' and 'a changing macro environment' for the spending cuts, which have cast fresh doubt on the government's clean power goals. Phillips-Davies said the company had faced delays to two Scottish renewable energy projects – the Coire Glas hydropower project in the Highlands, and the Berwick Bank offshore windfarm development, which was submitted to the Scottish government for approval in late 2022. Together these renewable energy projects would power the equivalent of approximately 9m households in the UK once operating. SSE has also faced delays to the second phase of its Arklow Bank offshore windfarm off the Irish coast. The government had aimed to double the UK's onshore wind power, triple its solar power, and quadruple its offshore wind capacity by 2030 as part of a plan to create a power system 95% free of fossil fuels. SSE had expected to help the government meet these goals by increasing its renewable energy generation fivefold to 50 terrawatt hours (TWh) by 2030. Its renewable energy generation output climbed by 18% last year to reach 13.3TWh in March of this year. SSE's step back from renewable energy investment will enable the FTSE 100 energy group to focus on investing in high-voltage power cables and local electricity distribution grids, which provide predictable, regulated returns. The company's overall adjusted profits slipped by 3% to £2.14bn for the year. skip past newsletter promotion Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion Phillips-Davies used his final statement before he steps down from the role later this year to underline the company's commitment to developing new offshore windfarms in UK waters. He said SSE would continue its pace of investment, which stands at £8m a day, and called for stable market conditions and low risk to support its ambitions. This includes scrapping proposals to replace Great Britain's electricity market with a series of zonal markets with prices set by local supply and demand, according to Phillips-Davies. 'While the market needs reform, it does not need zonal [pricing],' he said. 'We've seen a whole swathe of the industry – all the main developers – come out firmly against zonal. It adds a whole lot of uncertainty and tens of billions of pounds to the cost of getting to net zero by 2030. It also introduces – tragically – a potential postcode lottery on people's bills,' he said.
Yahoo
21-05-2025
- Business
- Yahoo
Green energy giant slashes investment by £3bn in blow to Miliband
Energy giant SSE has slashed its green energy spending plans by £3bn and warned it will not hit its 2030 net zero goals. The power company told shareholders it was 'unlikely' to meet targets for renewable output amid the 'changing macroeconomic environment and wider delays to planning processes'. SSE, one of the operators of Britain's high-voltage power grid, said it would reduce spending on renewables by £3bn over the next five years, blaming planning and policy delays by the UK and Scottish governments. Alistair Phillips-Davies, the SSE chief executive, said the company would cut its investment expectations to around £17.5bn 'reflecting financial discipline ... and consent phasing in networks'. 'Consent phasing' is where separate planning permissions must be granted for each stage of construction. It follows last month's announcement that it would cut 300 jobs from its renewables business. The bulk of the remaining investment cash – about 60pc – will be invested in SSE's transmission and distribution networks with only about 30pc going to new renewables such as offshore wind. Mr Phillips-Davies said SSE's portfolio had to be built to 'withstand risk and uncertainty'. He said: 'What we see on planning is that historically, policies haven't been conducive to getting many planning consents approved. 'Our Berwick Bank offshore wind project has been on [Scottish] ministers' desks for about three years now. In transmission our Argyll-Skye link project is well over two and a half years.' He said SSE was continuing work on its massive Dogger Bank wind farm 80 miles off England's north-east coast, with the first phase due to become operational this year, eventually powering 6m homes on a windy day. However, Berwick Bank, which is potentially even larger, has been awaiting Scottish ministerial approval for so long that it missed out on the opportunity to take part in last year's government funding round. Mr Phillips-Davies suggested that Ed Miliband will need to also raise subsidy rates for future offshore wind projects or risk energy companies abandoning vital projects. That warning came as the Energy Secretary aims to commission thousands more offshore wind turbines in another funding round this autumn. The subsidy system, funded by levies on consumer bills, offers developers a guaranteed minimum price for the power they produce and has been getting steadily more expensive. It follows last month's announcement by Danish developer Orsted that it had abandoned plans to develop Hornsea 4, another giant wind farm, even though it had been guaranteed a minimum price of £85 per megawatt hour – among the highest rates ever offered. Mr Phillips-Davies said Orsted's decision suggested that Mr Miliband might have to offer even more to future developments. He said: 'This might tell you that companies in a similar position [to Orsted] might seek a higher price.' SSE reported £2.4bn in adjusted operating profit in the year to the end of March. Profit after tax was £1.8bn. Its distribution and transmission divisions are among the most profitable, generating £1bn in adjusted profits – up from £691m last year. The distribution division runs the networks linking homes and businesses to the national grid across central southern England and the north of Scotland. Its transmission division runs the high voltage grid in northern Scotland. The profits for SSE Renewables division also surged by 25pc to £1bn, up from £833m last year. Mr Phillips-Davies said he hoped planning processes would accelerate. 'What's been encouraging is that the administration in Scotland has committed to 52-week turnarounds on planning, and indeed, the new Labour Government are putting in place a new Planning Bill and new planning regime, which we would hope will significantly accelerate applications.' He warned that a move to zonal pricing with prices set by local supply and demand, would risk introducing confusion and a new set of delays at an already-turbulent time for UK energy. 'Zonal pricing just represents a dislocation in the market, significantly increasing costs and jeopardizing 2030 delivery. It's a really bad idea.'
