NORWICH, England (Reuters) - Iberdrola’s (IBE.MC) Scottish Power will use offshore wind power to replace the capacity of the gas and hydro power projects it is selling, with wind becoming its sole source of electricity production, Iberdrola’s director of Offshore told Reuters.
Scottish Power, the British arm of the Spanish energy giant, earlier this month announced plans to sell a group of gas, hydro and pumped storage power plants for 702 million pounds ($900 million) to British power generator Drax (DRX.L).
The sale makes Scottish Power the first of Britain’s big six energy suppliers to shift to 100 percent renewable electricity generation but it will more than halve its UK capacity.
Scottish Power already owns around 2,000 megawatts (MW) of operational on and offshore wind projects in the UK and plans to more than double this, with new East Anglia wind projects off the east coast of England set to replace the lost generation, Jonathan Cole told Reuters in an interview.
“If you look at the capacity of East Anglia one and three, with the two projects alone we will cover the generation being sold to Drax,” he said.
The 2.5 billion pound East Anglia One project will, at 714 megawatts (MW) of capacity, produce enough electricity to power around 600,000 homes in 2020.
The company is also developing the East Anglia Three windfarm, which at 1,200 MW could power around 890,000 homes.
Scottish Power has almost 3 million electricity customers and 2 million gas customers in the UK.
It does not yet have the capacity to provide all these customers with renewable power but this will change as new projects are built, Cole said.
“It’s entirely feasible that at some point in the future we will produce enough power on our own to supply all our customers with renewable energy,” he said.
At the East Anglia One site Iberdrola has installed 37 of 102 jacket foundations which will provide the base to house the near 200 meter high turbine towers for the project.
East Anglia One has already secured a subsidy from Britain’s government through its contracts for difference renewable auction and Cole said the company will enter East Anglia Three into next year’s auction.
“It’s fully consented, with everything ready to bid into the next auction process in the UK next year,” he said.
Under the government’s renewable subsidy auctions project developers are awarded a minimum price for the electricity they will produce.
The cost of producing electricity from offshore windfarms has plummeted in the past few years, helped by larger turbines.
Britain’s last renewable auction, held in 2017, cleared at a record low of 57.50-74.75 pounds per megawatt hour for offshore wind, figures Cole said the company is comfortable with.
“Anyone who’s in the UK market has to look at what happened last time and be pitching around that level,” he said.
Scottish Power could also develop two more East Anglia sites with a combined capacity of 1,700 MW, he added.
($1 = 0.7805 pounds)
Reporting By Susanna Twidale; Editing by Kirsten Donovan