SSE sounds offshore wind retreat
UK utility SSE today signalled a widespread retreat from the offshore wind sector – including the 340MW Galloper project – narrowing the entire focus of its near-term plans to 375MW at the Beatrice development in Scotland.
SSE's finance director Gregor Alexander told investors this morning that "despite the best efforts of ourselves and others" the cost of offshore wind construction has not got down to a level that the group finds acceptable as an investment risk.
The utility said it will continue to invest in Beatrice “for the rest of this calendar year” but plans to reduce its stake in the 750MW project to no more than 50%, while delivering the EPC support needed to keep it on course for a final investment decision in 2016.
The company also signalled it sees no future for itself in the 340MW Galloper project.
SSE, which has been reviewing its entire offshore business strategy for several months, is jointly developing Galloper with German utility RWE at a site off eastern England.
Today SSE said it “does not currently believe that the costs of constructing and operating Galloper, and the revenue likely to be earned from it once built, will provide a return on SSE's capital investment that will enable the project to compete successfully against other projects in SSE's wider investment portfolio over Galloper's planned construction timeline.”
The company told investors it will "now work with its partner and other stakeholders to secure the maximum possible value for its interest in the project".
SSE “will continue to support the progress of development work on Seagreen (3.5GW) and Forewind (7.5GW) with the objective of securing the necessary consents for construction”, but said “it will not extend beyond that the scope of its commitments to the projects in the near term”.
Plans for a 690MW offshore wind farm off the coast of Islay will not be invested in “for the foreseeable future” although SSE will carry on working with partners.
The utility – which today made a raft off announcements including job cuts and a consumer price freeze – also confirmed it will not proceed with two onshore wind farms, Dalnessie and Fairburn extension, totalling 117MW as they are “no longer financially viable”.