Rise of renewable energy hits power station’s profits hard

Saltend Power Station (Credit: Wikipedia)

The rise in the amount of electricity generated by renewable energy sources has been blamed for pre-tax profits tumbling from £125,000 to just £5,000 in a year at Saltend Power Station.

Publishing accounts for the year ended December 31 2018, Saltend Cogeneration Company, which operates the power station, said: “The deterioration in financial performance was due in part to reduced electricity margins from reduced demands for gas, as renewable sources increased.”

However, Saltend Power Station – a CCGT (Combined Cycle Gas Turbine) power station located at Saltend Chemicals Park on the Humber Estuary – reported a rise in turnover; from £342,108 in 2017 to £392,685 in 2018.

The firm added: “The short-term outlook predicts continued reductions in electricity demand as a result of continual improvements in energy efficiency, however the medium term suggests it will then increase following an increase in demands for electric vehicles and electric heat pumps.

“The UK committee for climate change currently predicts demand of around 365TWH by 2030, reflecting an eight per cent increase from today’s levels.”

Saltend Cogeneration Company was established in 2000 and is one of the largest natural gas-fired electric power stations in the UK.

The firm added that UK electricity demand in 2018 was “broadly stable” but was the lowest level of generation since 1994. Gas fired generation accounted for 34% of generation – a decline of 4% from 2017. The company warned that this was expected to follow the same downward trend.

Meanwhile, generation from renewable sources increased 13% to a record high, driven by an increase in capacity across both solar an wind.

Coal fired generation continued to decrease as the UK moves towards the target of such power stations being phased out by 2025.

Within the year, Saltend Cogeneration Company  undertook a new debt facility agreement to refinance the business, valued at £108m.

The firm added: “The plant continues to perform well operationally and suffered no major incidents within the year.

“Due to the increased generation from renewable sources, flexibility continues to be of great importance to take advantage of market fluctuations. As a result of the change in generation demand patterns, the long term service agreement with Mitsubishi remains key to delivering a revised maintenance schedule which better allows the plant to operate more flexibly.”

Last year, the company announced it had “reaped the benefits” in 2017 from the decline of coal power across the country.

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