Output of electricity from renewable sources decreased in the first half of 2016/17, compared to the same period in 2015/16 (3,026GWh compared to 3,805GWh). The primary driver for this differential was the weather; put simply there was lower rainfall and less windy conditions in the first half of 2016/17 across Great Britain than in the same period last year. Overall renewable capacity also reduced slightly, from 3,093MW to 2,975MW, following the sale of 49.9% of Clyde wind farm in March 2016. Availability of the renewable portfolio remained high throughout the period.
SSE continues to operate under the policy support regime for renewable generation capacity in GB, currently delivered through the Renewables Obligation (RO) (which also applies in Northern Ireland); and the Contracts for Difference (CfD) mechanism.
SSE has three onshire wind projects under construction which will quality for the GB RO:
- Dunmaglass (94MW) – the project is now exporting electricity and is scheduled for completion in the Spring of 2017.
- Clyde Extension (173MW) - turbine erection is now under way and the project is expected to be fully operational in 2017.
- Bhlaraidh (108MW) – turbine erection is now under way and the project is expected to be fully operational in 2017.
SSE also has one onshore wind project in pre-construction which it expects to qualify for the GB RO:
- Stronelairg (225MW) – The Judicial Review appeal was upheld by the Court of Session in July 2016. Although this is a challenging project, SSE intends to proceed with the construction of the project and expects to secure accreditation under the Renewables Obligation
SSE also has onshore wind farm projects in development which, if developed, will not qualify for the RO:
- Viking (with consent) (up to 457MW – SSE share 50%) – SSE, with its Joint Venture partner, has continued to develop this project. In order to progress further it requires State Aid clearance from the European Commission and confirmation that Remote Islands Wind projects will be eligible to participate in forthcoming CfD auctions.
- Strathy South (in planning) (up to 133MW) – Objections were examined fully at a Public Local Inquiry in 2015 and it is awaiting a consent decision from Scottish Ministers.
- Gordonbush Extension (in planning) (up to 32MW) – Highland Council did not object to the planning application and it is awaiting a consent decision from Scottish Ministers.
Future development options for later onshore wind projects are being explored in light of recent changes to the UK’s policy and regulatory framework.
Offshore wind projects in development
SSE's offshore work and resources are focused on the Beatrice offshore wind farm (588MW – SSE share 40%) in the outer Moray Firth. The £2.6bn project reached financial close in May 2016 and is progressing in accordance with the terms of the Investment Contract awarded to it by the UK government in 2014. SSE’s Joint Venture partners on the project are Copenhagen Infrastructure Partners (CIP) (35%) and SDIC Power (25%).
The wind farm is being developed with a tier 1 supply chain comprising Subsea 7, Siemens Wind and a consortium of Nexans and Siemens Transmission and Distribution Ltd. Onshore construction is under way, offshore construction is planned to commence in 2017, and the project is expected to be fully operational in 2019.
In addition to Beatrice, SSE has an interest in two further offshore wind farm developments: Seagreen (up to 3,500MW – a 50:50 partnership with Fluor Limited); and Forewind (up to 4,800MW – a four-way partnership with RWE Innogy, Statoil and Statkraft). The first phase of Seagreen (up to 1,050MW) was subject to a judicial review in the Court of Session which found in favour of the petitioner, RSPB, in July2016. The Seagreen partners will work with the Scottish Government to progress an appeal of this judgement. Forewind has consent for four separate 1,200MW projects in the Dogger Bank Zone, and the four Joint Venture partner organisations will agree the best route forward for each.
Future development opportunities
SSE will continue to focus on opportunities for the development, construction and commissioning of onshore and offshore wind farm capacity in the UK and Ireland, consistent with its commitment to efficiency in investment decision-making. Looking further ahead, it is seeking to build opportunities to add to its portfolio of wind farms in these two countries.
SSE will, however, always consider opportunities to extend, in a careful and measured way, its established interests in, knowledge of and skills related to onshore wind energy. With this in mind, other jurisdictions may be considered if they play to SSE’s strengths, add to its balanced range of energy businesses and can deliver long-term growth for shareholders.