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We CAN solve the riddle of clean energy, says SSE boss

We CAN solve the mystery of clean energy, says SSE boss ALISTAIR PHILLIPS-DAVIES



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In the twenty years that I have worked in the energy industry, we have made seemingly impossible choices.

Do we reduce CO2 emissions or do we keep the lights on and the bills affordable? Are we building new infrastructure cheaply or are we prioritizing jobs and supply chains in the UK?

You could be forgiven for thinking that these choices are now more grim than ever.

Confidence: SSE chief executive Alastair Phillips-Davies (pictured) believes clean energy is key to meeting our needs for the future

Confidence: SSE chief executive Alastair Phillips-Davies (pictured) believes clean energy is key to meeting our needs for the future

But only by building more of our own clean energy infrastructure here in Britain can we protect ourselves from the next energy crisis.

Let me give an example.

We recently completed the third phase of construction of the Dogger Bank, the world’s largest offshore wind farm, which we are building off the north east coast of England.

Each of the 190 turbines will be nearly as large as the Shard. Just one revolution of its giant blades is enough to power a home with clean electricity for more than two days. Sound expensive? You might be surprised.

Like most new low-carbon generations being built, the Dogger Bank has a ‘contract for difference’ (CfD).

This means that it gets a fixed price for its output, regardless of the wholesale price at the time. When the wholesale price is lower than this ‘strike price’, it receives a markup to close the gap.

When the wholesale price is higher, as it is now, the generator returns the money to the pot, which should result in lower bills than usual due to a lowered price cap and lower rates.

In recent months, Dogger Bank’s strike price has been below £50 per megawatt hour, compared to a wholesale price north of £200.

Had it been operational today, we estimate it would have repaid more than £1.6 billion to consumers by the winter of 21/22, equating to a saving of around £60 for each household in the country.

In the first three months of 2022 alone, the agency that manages CfDs predicts that wind farms will repay nearly £600 million to consumers.

And the Dogger Bank already generates more than just electricity. For the people and the economy in the Northeast, and for the entire leveling agenda, the impact will be huge.

But there’s no point in building all these new generations if we can’t connect them. We need the network infrastructure to transport the power to where it is needed.

In the coming years, we and other network companies will seek approval from the regulator, Ofgem, for major investment proposals to create a net zero net. Short-term action to help those hardest hit by higher bills this year.

But the long-term interests of consumers are best served by investing now in the infrastructure, which means that they are no longer at the mercy of imported gas.

The ability to take this long-term view is an important reason why, despite the recent discussion about whether we should split the company, we believe the SSE group is better as one integrated national clean energy champion.

The energy crisis is one of the most important problems of our time alongside Covid, but with the right investment and strategy we can solve it.

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