SSE has declared in its recent trading update that the quarter saw an improvement in the long-term policy and regulatory environment to support net zero in the UK.
Despite this, the company stated that its renewables business, SSE Renewables, saw its generation output fall 15% behind plan for the nine months to 31 December 2023, largely due to “exceptionally still and dry weather conditions”.
Three primary changes contributed significantly to the improved UK net zero landscape. These include the publication by Ofgem of its Sector Specific Methodology Consultation for the RIIO-3 framework.
The consultation sets out the energy regulator’s proposed methodologies for the gas transmission, gas distribution and electricity transmission sectors for the RIIO-3 period between 2026 and 2031.
Another key change includes the increases to the administrative strike price for allocation round six (AR6) of the Contracts for Difference (CfD) scheme, something from which SSE could benefit.
Previous coverage from Current± highlighted that the strike price for offshore wind had increased by 66% compared to allocation round five (AR5). This means projects will receive £73/MWh in the upcoming auction.
Floating offshore wind is also set to benefit from an increase in the strike price jumping by 52% from £116/MWh to £176/MWh. It is worth noting that these increases came about after no offshore wind projects partook in AR5 as it was not deemed economically viable for projects to compete.
The final factor SSE highlighted was the progress made in developing to market for carbon capture and storage, hydrogen, and in particular, long-duration energy storage, a topic about which SSE has been vocal, calling on the UK government to introduce a framework to support these technologies.
As previously mentioned, SSE Renewables also shared that its output was down 1.3TWh. This shortfall is relative to planned output for the full year of 10%. This was a trend across each of SSE Renewables’ wind and hydro assets.
Onshore wind had a planned output of 3,574GWh for the nine months to 31 December 2023, but has only achieved 3,109GWh. This is below the figure for the same period in 2022 when it stood at 3,458GWh.
Much like onshore wind, offshore wind is also below its planned target for the period. It was planned to hit 2,495GWh but has achieved 2,056GWh so far. This is 82% of the planned output.
Conventional hydro is also below its planned output. SSE planned for it to reach 2,341GWh for the nine months to 31 December 2023 but it has achieved 1,947GWh thus far.
