SSE Slashes Offshore Wind Plans

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - Limited government support and concerns over return on investment have been cited as key the reasons why U.K. energy company SSE plc (Perth, Scotland) has drastically reduced its interests in a number of large offshore wind projects worth over €24 billion ($32.9 billion).

The company said that it has decided to "narrow significantly the focus of its near term development plans for its offshore wind development portfolio". The company has no plans to take its involvement in the 340-megawatt (MW) Galloper offshore windfarm any further than the current phase of development. Galloper is a 50:50 joint venture with RWE Innogy and SSE plans to sell its share. The company has also said that it is postponing any further investment in the proposed 690 MW offshore windfarm off the coast of Islay but will work other stakeholders in relation to its development. The company plans to continue its investment in the 750 MW Beatrice offshore wind farm, a 75:25 partnership between SSE and Repsol Nuevas Energias UK, for the rest of this year in relation to the engineering and procurement activities required to ensure the project's continued progress towards a Final Investment Decision. It will decide on further invest next year but announced that it plans to reduce its stake in the project to 50%.

SSE is also involved with the SeaGreen and Forewind consortia which won leases in the Crown Estate's Round 3 site allocation process but has now decided it has no near term plans to continue its involvement beyond the development process of both. SeaGreen is a 50:50 partnership between SSE Renewables and Fluor Limited, which has submitted consent applications to Marine Scotland for two windfarm areas in the Firth of Forth with a capacity of 525 MW each in the 3,500 MW Firth of Forth zone. Forewind is a four-way partnership with RWE npower Renewables (Swindon, England), Statoil ASA (NYSE:STO) (Stavangar, Norway) and Statkraft AS (Oslo, Norway), which has submitted a consent application to the Planning Inspectorate for two windfarm projects of up to 1,200 MW each on Dogger Bank.

"In offshore wind farm development, there are two major, related hurdles that projects currently have to overcome," explained Jim Smith, SSE's Managing Director, Generation Development. "The first is the Levy Control Framework, which has the reasonable objective of controlling costs to customers from government energy policies -- but which also means there is limited support for offshore wind. The second is cost -- the future of offshore wind farm development depends on a sustainable and lower cost supply chain. Having looked across our offshore portfolio, and across our capital and investment programme as a whole, we believe that we should focus our near term development activity on Beatrice. Taking it forward to subsequent stages of development and construction will be challenging, but achievable, and that is what we are working towards."

He added: "While increasing our commitment to the development of Galloper, SeaGreen and Forewind is not the right option for SSE at present, in the context of our wider investment plans, we will continue to work with partners and other stakeholders to achieve the most positive possible outcome for each project."

SSE's cuts represent a major blow to the Dogger Bank project, the largest of the U.K.'s Round 3 offshore windfarm developments. At the start of March, the Forewind consortium announced that it was reducing the development from its original 9,000 MW to 7,200 MW. For additional information, see March 3, 2014, article - U.K.'s Largest Planned Offshore Project Shrinks.

In February, SSE canned two onshore wind projects when it withdrew its planning applications for the Dalnessie windfarm (81 MW) in Sutherland and the proposed extension to Fairburn windfarm (36 MW) in Glen Orrin, Ross-shire. For additional information, see February 25, 2014, article - SSE Drops Two Scottish Windfarms.

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