Profits plunge at ScottishPower Renewables as winds ease off in UK

SCOTTISHPOWER has suffered a near 30 per cent fall in profits at its key renewables arm after changes in weather conditions posed challenges.

The Glasgow-based giant said ScottishPower Renewables made £156.9 million underlying profits in the first nine months of 2016, down £62.8m, 28.6 per cent, from £219.7m in the same period lastyear.

ScottishPower, which is owned by Spain’s Iberdrola, said the fall in profits was largely driven by the 26 per cent reduction in total first half output from assets such as windfarms.

The division regained some ground in the latest three months, when output increased by 5.9 per cent annually.

The update underlines how big an impact variations in weather conditions can have on wind power businesses.

ScottishPower highlighted the fact the full-year 2015 was a record year for wind power output in the UK.

Last month Perth-based SSE said first-half profits would be hit by the significantly lower output of electricity from renewable sources than in the same period in 2015.

ScottishPower seems confident renewable energy assets will generate attractive returns over the long term. It is building eight new onshore wind projects across Scotland, with investment of more than £650m.

Chief corporate Keith Anderson officer noted ScottishPower has awarded £340m contracts for contractors to install smart meters across the UK.

While the company increased the profits it made from conventional power generating activity by £22m in the first nine months, it said this reflected the fall in costs linked to the closure of the Longannet power station in Fife in March.

The retail arm, which sells gas and electricity to around 5.3 million consumers, suffered a £17m fall in profits partly due to milder weather.

Scottish Power was fined £18m by Ofgem in April after the regulator found it had let its customers down during the implementation of a new IT system.

Earnings at the networks infrastructure division fell to £580.9m, from £597.4m. The company said the returns for the networks arm are largely driven by the phasing of investments under the plan to upgrade the UK’s power networks that utilities agreed with Ofgem last year.

Total earnings before interest, tax, depreciation and amortisation fell to £924.9m in the first nine months from £999.4m.