We CAN solve the clean energy conundrum, says SSE boss


We CAN solve the clean energy conundrum and stop bill shocks, says SSE boss ALISTAIR PHILLIPS-DAVIES


In my two decades working in the energy industry we have faced seemingly impossible choices.

Do we cut carbon emissions – or do we keep the lights on and the bills affordable? Do we build new infrastructure cheaply – or do we prioritise UK jobs and supply chains?

You could be forgiven for thinking these choices are now starker than ever.

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

Confidence: SSE chief executive Alastair Phillips-Davies (pictured) believes clean energy is the key to providing 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 finalised arrangements for the third phase of building at Dogger Bank, the world’s largest offshore wind farm, which we’re constructing off the north-east coast of England.

Each of 190 turbines will be almost as tall as the Shard. Just one turn of its giant blades will be enough to power a home with clean electricity for more than two days. Sounds expensive? You might be surprised.

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

This means it is paid 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 top-up payment to bridge the gap.

When the wholesale price is higher, as it is now, the generator pays the money back into the pot, which should result in bills being lower than otherwise through a reduced price cap and lower tariffs.

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

Had it been operational today, we estimate it would have paid back over £1.6bn to consumers over winter 21/22, equivalent to a saving of around £60 for every household in the country.

In the first three months of 2022 alone, the agency that administers CfDs forecasts wind farms will pay back almost £600m to consumers.

And Dogger Bank is already generating more than just electricity. For the people and economy in the North East, and the whole levelling up agenda, its impact will be huge. 

But there’s no point building all this new generation if we can’t plug it in. We need the networks infrastructure to transport the power to where it’s needed.

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

But the long-term interests of consumers are best served through investing now in the infrastructure that will mean they are no longer at the mercy of imported gas.

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

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

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