Scottish power recently announced that it will shift its entire operations to wind power after agreeing to sell nearly 2.6 GW of gas, hydro and pumped storage plants to a subsidiary of Drax for £702m. The move comes in succession to the firm’s closure of Longannet, Scotland’s last coal-fired power station, back in 2016. This sale of their final gas power stations means that the firm will become the first vertically integrated energy company in the UK to divest its entire fossil fuel portfolio. Furthermore, with plans to invest £5.2bn into its renewable capabilities over the next four years and into solar power for the first time, the firm is paving the way in tackling climate change. Fortunately this comes right after the IPCC report which warned that without swift action to control emissions the world will begin to suffer global warming’s worst consequences much sooner than previously forecasted.
The UK subsidiary posted improved earnings this third quarter of around 20 per cent at £266m in earnings before interest tax, depreciation and amortisation in its renewable segment, driven by increased wind production following the completion an investment in eight new onshore windfarms in Scotland. However, further growth for the firm is in offshore, with the firm hoping to secure a contract in the auction for a portion of the £557m in government subsidies for offshore farms. This would fund its planned 1200MW East Anglia Three project which would dwarf the current biggest, a 659MW scheme off the Cumbrian coast, and be capable of powering nearly 900 000 homes. However, with the ‘wind drought’ brought to the UK by the heatwave this summer and record-breaking solar output levels helping to fill up some of this gap, Scottish power are covering their backs by investing in solar energy as well to ensure they continue to manage supply and demand with a diverse energy mix. Furthermore, as such a big player in energy, their entry into this secondary market could cause a major shakeup in a sector stalled by policy changes and subsidy cuts.
As the first of the ‘big six’ energy companies to switch completely to renewable energy, Scottish Power’s move is about more than just greenwashing. They wield a lot of influence over the market and could potentially be at the forefront of a monumental change in the energy sector. Currently offshore wind farms provide nearly a tenth of the UK’s electricity, so Scottish power’s attempt to more than double its clean energy sources and make electricity ‘cleaner and cheaper for Britain’ could make a big difference to the country’s energy landscape as they have the free capital and capacity to do it. In a “pivotal shift” for the company, Scottish Power’s executive director sees the sale as the start of a great future, noting that “there is a real buy-in to tackling climate change and the future of renewable energy”. Kate Blagojevic, the head of energy at Greenpeace UK agrees, adding that “big utilities across Europe have been shedding their dirty fossil fuel infrastructure because it makes economic and environmental sense.” It’s clear that Scottish Power’s move is a serious factor in the transition to a future of greater sustainability. The question is now: will others follow suit?