SSE's UK wind power hedge price up 18% on year in 2020/21

SSE's hedged power price for its UK wind farms rose 18% year on year in 2020/21, and was seen rising into 2021/22 and 2022/23, company data showed May 26.

The utility had sold 100% of expected wind output of 4.5 TWh at GBP46/MWh ($65/MWh) for 2020/21 to end-March 2020, up from GBP39/MWh for 2019/20.

It had sold 85% of expected 2021/22 output of 4.2 TWh at GBP48/MWh, and 60% of 2022/23 at GBP49/MWh.

The prices are pure wholesale market returns and exclude additional volumes and income from balancing market activity, Renewable Obligation Certificates, ancillary services, pre-commissioning, capacity mechanism and shape variations.

They also exclude volumes and income relating to Irish wind output, pumped storage and Contracts for Difference.

"Following an assessment of the latest market conditions and wind capture percentages for the relevant wind assets, the targeted hedge percentage will now be least 90% across the year [up from 85%]," SSE said.

To date, target hedge levels have been achieved solely through the forward sale of electricity, SSE said.

"Future target hedge levels will be achieved through the forward sale of either electricity, or gas and carbon equivalent (if converted to electricity)," it said.

This would reduce exposure of its wind assets to volatile spot power market prices while still providing a hedge for the vast majority of anticipated energy and carbon commodity price exposure 12 months in advance of delivery, SSE said.

Irish impairment

Meanwhile, charges against fossil plant assets and coronavirus impacts did little to dent positive 2020/21 results for the utility, with adjusted operating profit up 1% at GBP1.51 billion ($2.14 billion).

SEE reported a GBP58.1 million impairment against its Great Island gas plant in Ireland following reductions in forward price curves and forecast demand, a GBP112.3 million net exceptional charge following the decision to close the Fiddlers Ferry coal station in March 2020, and a GBP170 million impact on operating profit from the coronavirus.

SSE Renewables' adjusted operating profit increased 29% to GBP731.8 million, including developer profits of GBP226 million from stake sales in Seagreen and Dogger Bank wind farms.

Excluding these, operating profit decreased due in part to adverse weather conditions reducing output by 10% year on year, partially offset by higher plant availability and higher achieved power prices, SSE said.

Thermal Generation's adjusted operating profit increased 5% year on year to GBP160.5 million as strong operational performance combined with higher utilization "to stabilize the energy system in periods of low generation or high demand."

Offshore drive

SSE is currently building more offshore wind capacity than anyone else in the world, CEO Alistair Phillips-Davies said (see table).

"Our existing GBP7.5 billion capital expenditure program to 2025 is helping to drive the UK's decarbonisation effort," he said.

Despite disruption caused by the coronavirus, work at Dogger Bank, Seagreen and Viking "are progressing well," he said.

SSE had "a clear aspiration to reach a run rate of at least 1 GW of new renewables assets a year during the second half of the decade, as part of which we continue to seek options overseas," he said.

SSE RENEWABLES: PROJECT PIPELINE

* Partially consented. ** Consented but expected to require revenue stabilization mechanism

Source: SSE