Iberdrola Divests UK CCGTs to Drax
ScottishPower, wholly-owned by Spanish utility Iberdrola, says it has become the first of the Big Six vertically-integrated UK energy companies to exit coal and gas generation.
The company said October 16 it has agreed to divest 2,566 MW of UK power plants to Drax for £702mn ($922mn) cash. The deal is conditional upon the approval by Drax’s shareholders and the UK competition regulator, although Iberdrola said the latter had not indicated any objections at this stage. Gas-fired combined cycle plants (CCGTs) account for 2,000 MW of the capacity being divested.
Drax last month acknowledged it was in talks to buy generation assets from ScottishPower but did not confirm then that it was looking at buying all the latter’s gas and hydro assets.
Iberdrola CEO Ignacio Galan said the sale was “consistent with our strategy” while ScottishPower CEO Keith Anderson said the sale marked a "pivotal" moment for the company which it had already closed its coal plants and is now selling off its gas plants.
The 2,566 MW generation assets included in the sale are: three CCGTs in southeast England at Damhead Creek (805 MW), Rye House (715 MW) and Shoreham (420 MW) and one in Blackburn, northwest England (60 MW) – along with hydro units in Scotland at Cruachan (440 MW), Galloway (109 MW) and Lanark (17 MW), plus a 50,000 t/yr biomass-from-waste facility at Daldowie near Glasgow.
ScottishPower added that it is investing £5.2bn over the next four years in UK renewables and smart grid projects to more than double its existing 2 GW capacity (currently enough to power 1.2mn homes) and in future will generate all its power from wind. It will however continue to market and trade gas, retains the Hatfield gas storage facility and Avonmouth (former LNG) development site, and remains free to buy in power generated from gas and other fuels on the open market.
Drax historically had heavy coal-fired exposure but has reduced this through acquisitions and plant closures. CEO Will Gardiner said October 16: "I am excited by the opportunity to acquire this unique and complementary portfolio of flexible, low-carbon and renewable generation assets."
Drax's statement added: "Damhead Creek also benefits from an attractive option for the development of a second CCGT asset, Damhead Creek II, which provides additional gas generation optionality."
Rival UK generator SSE this month also committed to reducing the carbon intensity of electricity generated by a further 50% by 2030 based on 2018 levels; 75% down on 2016 levels.
Update: UK firm ContourGlobal confirmed October 17 following "press speculation" regarding the potential acquisition of a 50 MW Concentrated Solar Power Plant in Spain from Iberdrola "that it has been in negotiations with Iberdrola [and that a] further announcement will be made if and when appropriate."