SSE plans £600m green energy spending

SCOTTISH & Southern Energy (SSE) is to spend £600 million by 2010 improving the green credentials of its generation portfolio, it said yesterday.

However, it has warned again that its efforts to increase the amount generated from renewable energy sources was still being held up by the planning system.

The Perth-based utility, the last remaining UK-owned generator to announce plans from a review of its investment opportunities, aims to cut the amount of per kilowatt hour of electricity over the next decade.

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Green measures are an increasing focus for energy companies, with the major utilities jostling to take the lead on the subject.

In a pre-close trading statement SSE said measures it was considering include upgrading the existing conventional boiler at Peterhead power station with a new state-of-the-art combined cycle gas turbine (CCGT).

If approved, the upgrade would increase the CCGT capacity at Peterhead by 340MW to 1,520MW and cut more than 350,000 tonnes of from the atmosphere. SSE is already building another CCGT station in Marchwood near Southampton and plans to identify a site for another station.

Chief executive Ian Marchant said the company had a raft of wind farm projects in various stages of planning, and a review of its Beatrice offshore wind farm in the Moray Firth has indicated a further 1,000 MWof offshore wind power might be viable.

All up the company aims to increase its generation capacity by 1,000MW to 11,000MW by 2010, including 1,000MW from hydro and wind generation capacity by the end of this decade. The company had aimed to have 1,000MW of energy from renewable sources by 2008, but says it is held up by project delays.

Marchant repeated the frustrations yesterday, blaming a planning system which would prevent any major utility hitting renewable obligations.

"The reality is the UK's not going to meet its renewables targets because of delays in the planning system. We've got enough steam going through planning, but they ain't all going to get approved or constructed in time."

SSE, midway through the construction of a 100MW hydro station at Glendoe near Loch Ness, said there was potential for other major hydro schemes in the Highlands. "Their development would, however, require a planning and policy framework more attuned to the critical need to maximise production of energy from renewable sources and reform of the current regime for charging generators for the use of the electricity networks," said Marchant.

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SSE also said the planning for wind farms was "arduous" and uncertain.

To help meet the targets, SSE said it would buy two million carbon emission reduction certificates over the next five years, including 160,000 to support hydro electricity schemes in Brazil, announced yesterday.

Marchant said the company expected pre-tax profits would be "slightly ahead" of analysts' consensus of 1.18 billion. Shares fell 9p to 1,502 after rising more than 100p in the last fortnight.