April 30, 2020

ScottishPower says electricity demand plunges amid lockdown

ScottishPower says electricity demand plunges amid lockdown

The amount of electricity used by ScottishPower customers between Monday and Friday has fallen to lows normally only seen at the weekends when much of the corporate world is taking a break.

Across the UK, demand for electricity has been significantly depressed by lockdown restrictions, a spokesman for the company said. With home usage dwarfed by demand for powering offices, factories, retail and other consumer outlets, some weekdays are running below levels that would have been typical on a weekend before restrictions were put in place to combat the spread of Covid-19.

The revelation came after ScottishPower and its parent company, Spanish energy giant Iberdrola, issued their trading updates for the first quarter of this year. In the case of ScottishPower, the figures covered only the first week of lockdown restrictions in the UK.

READ MORE: ScottishPower hails potential of retail arm despite customer losses

The Glasgow-based subsidiary showed increased earnings across all its divisions, which include power generation, operating the networks that transport power, and the sale of energy to households and businesses.

The generation business, ScottishPower Renewables, recorded a 29% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) to £214.2 million. Much of that was attributable to an increased contribution from East Anglia One, its 714-megawatt windfarm located 43km off the coast of Suffolk.

The development has passed a significant milestone in that construction of all 102 of its turbines is now finished. The project is due to be completed in the third quarter of this year when all connected to supply power, with new ones coming on stream daily.

Compared to the first quarter of 2019, production was up by 40%, with two-thirds of the increase attributed to East Anglia One.

READ MORE: £1.6bn windfarm deal boost for North Sea

ScottishPower is focused on renewable energy after selling its conventional power generating plants to Drax in a £700m deal in 2018. In August of last year, Iberdrola sold a 40% stake in East Anglia One to investment bank Macquarie, raising £1.6 billion to support the second and third phases of the East Anglia development.

ScottishPower chief executive Keith Anderson wants to use the company’s green credentials to win support from consumers by helping them feel that they are doing their bit to tackle climate change. However, this has yet to result in any significant uptake, with the number of retail customers in the first quarter of this year flat at 4.7 million.

Total electricity volumes were 11% lower than in the same period a year earlier, while gas volumes were down by 10%.

Despite this, EBITDA surged by 85% to £81.4m after the previous year’s results were hampered by industry-wide confusion over the application of price caps by regulator Ofgem. Those issues have now been resolved.

READ MORE: ScottishPower unveils plans to put solar panels next to wind turbines

Mr Anderson said projects like East Anglia One will provide the backbone to the “green recovery” that will kick-start economic activity across the UK.

“Successful installation of the turbines is a tremendous achievement for the East Anglia One project,” he said. “It brings us another step closer to completion when the windfarm will be producing the clean, renewable energy the UK needs to decarbonise and meet its pledge to reach net-zero.

“We are already seeing the benefit of the windfarm with a 40% increase in wind power this year, green energy that ScottishPower is providing directly to its own customers.”

The third division within the business, SP Energy Networks, recorded a 10% increase in EBITDA to £238.6m from its power transporting activities.

Across the wider group, Iberdrola posted a 6% rise in operating profit from its renewables business during the first quarter, which helped to offset a slight fall in its home market.

Net profits were 5% higher at £845m. The sale of an 8% stake in its Spanish renewables subsidiary Siemens Gamesa generated a capital gain of £422m in the fourth quarter, bringing reported net profit to £1.13bn.

This one-off gain will help mitigate any negative impacts from Covid-19 this year, Iberdrola said. The company is maintaining its profit forecast.

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