FTSE 100-listed electricity and gas company SSE has reported changes to existing thermal generation capacity expected during the 2013/2014 financial year.
Across Britain, SSE currently owns or has a stake in over 4,300 megawatts (MW) of gas and oil-fired generation capacity, over 4,300MW of coal-fired generation capacity and 80MW of capacity at its biomass plant in Slough.
As a result of the review of its generation assets, SSE said that it had decided to change the operating regime of a number of generation plants, the net effect of which would be to reduce SSE's thermal generation capacity in Britain by around 2,000MW over the next year.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
SSE reported that the changes would affect SSE's power stations at Ferrybridge, Keadby, Slough Uskmouth, and Peterhead.
The company said that the review was conducted "against a backdrop of challenging energy market conditions with continued extremely low 'spark spreads' and many new emission regulations which have weighed heavily on the viability of thermal generation plant".
These included "constraints imposed on power-generating plants not opted in to the Large Combustion Plant Directive, the early introduction of a Carbon Price Floor at an unexpectedly high level and the move towards full auctioning of CO2 emissions allowances under the EU Emissions Trading Scheme," the company reported.
Paul Smith, the Managing Director of Generation at SSE said: "We have made it clear that all of our power stations have to be able to operate economically over the medium term.
"The market conditions for some of our older generation plant have become increasingly difficult, but these changes to their operating regime should ensure they continue to contribute to the company's performance by safely delivering target levels of availability, efficiency, cost control and ultimately profit contribution."
He added: "SSE expects to maintain a diverse generation portfolio over the medium and longer term, but with a significantly lower carbon intensity than now. We have already committed to halving the carbon intensity of our generation portfolio every decade between now and 2050."
SSE's share price was unchanged at 1,484p at 12:30 on Thursday.
MF
