SSE has taken full ownership of offshore wind projects under development by Seagreen Wind Energy, in which it had a 50% share, acquiring the remainder from Fluor.
The Seragreen projects are in the outer Firth of Forth and Firth of Tay.
SSE said it is focused on preparing the Seagreen Phase 1 projects for the next UK contracts for difference auction planned by May 2019. Subsequent auctions are planned every two years, and £557 million of funding will be available.
For Seagreen Phase 1’s ‘Alpha’ and ‘Bravo’ projects, SSE is seeking amendments to the existing consent to take advantage of the advances in offshore wind turbine technology since the original consent was granted in 2014. The new proposal would see fewer, larger, higher capacity wind turbines and the inclusion of monopiles as a foundatoon option. Up to 120 turbines would be developed across the Alpha and Bravo areas with a potential capacity of approximately 1,500MW.
Martin Pibworth, SSE’s wholesale director, said: “The Seagreen acquisition aligns with SSE’s ambition to create value from owning, operating and developing clean energy assets and infrastructure. We are looking forward to taking full ownership of Seagreen as we progress through this critical phase towards the contracts for difference auction, expected in May 2019. SSE’s expertise in the development, construction and operation of offshore wind will be an asset to Seagreen, and we will review the ownership structure in due course.”
Commenting on the deal, Donald Brown, head of private clients at Brewin Dolphin Edinburgh, said the acquisition may offset some of the negatives of the latest trading update from SSE – the deal takes the energy provider’s total offshore wind portfolio to around 4GW and enhances its existing clean energy assets. “However, the fact remains that adjusted operating profit is expected to be around half the £586 million achieved last year and indicates a worrying direction of travel to shareholders, who have already seen the value of their shares drop close to 30% in the last five years.
“While the demerger of SSE Energy Services and its amalgamation with npower is a move in the right direction – providing long-awaited cost savings to support capex plans – we await clarity on what it will mean for those with a stake in the new business. In particular, although the group has stated today that the dividend will be 97.5p for 2018/19, the level of future dividends remains uncertain once more with today’s capital expenditure commitment.”