Scottish & Southern Energy Delays South Wales Gas Fired Power Plant

A couple of weeks ago Scottish & Southern Energy (SSE) announced it had met its growth expectation with a 3% rise in full year pre-tax profits to £1.29bn, but the company has delayed construction of a new power plant in south Wales because of a fall in UK demand thanks to the downturn.

SSE initial plans were to build a gas fired power plant in Baglan Bay, South Wales, which was scheduled to come on stream in two stages, in 2013 and 2015.  But the company said it is more likely to become operational in one go 2014 or 2015.   SSE blamed the delay on a short-term fall in demand for electricity following the economic downturn in the UK.

SSE is in the middle of a five-year programme of heavy capital investment likely to cost about £6.7bn.  Its capex projects include the new gas-fired power station in Marchwood, near Southampton – which last December became the first such plant to open in the UK in five years.

The company is also trying to buy EDF’s three electricity distribution business which are currently thought to be up for sale, market experts predictions are that if the transaction is completed it could sell for more than £4bn.

SSE has teamed up with Canadian infrastructure fund Borealis for its bid for EDF’s three electricity distribution companies.  However analysts and energy brokers across the country believe the company might also need a cash call if EDF agrees to sell its distribution business.  If SSE’s consortium bid were to succeed, the company will need some form of fund raising, and we believe that some extra cash might be raised to relieve pressure on the group’s finances.

Ian Marchant, SSE Chief Executive, said the price it was willing to pay had fallen after commencing due to diligence: “There are just bigger challenges [at the EDF unit] than we had thought.”

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1. New South Wales Gas Fired Power Plant…

   Power stations dont get built every day, but they should if we want to avoid an energy gap in the not to distant future. With energy consumption increasing each year, at some point, we will have an energy gap….

   Trackback by socialwebcms.com — June 17, 2010 @ 5:22 pm

2. Scottish & Southern Energy Delays South Wales Gas Fired Power Plant…

   We have a short fall on energy as predictions indicate that we will need more energy than we produce in the near future. With energy use rising by 10% each year in the UK, its easy to see why….

   Trackback by social.weehz.com — June 18, 2010 @ 11:02 pm

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