Industry NewsScottish and Southern Energy (SSE) has confirmed it is delaying the construction of its Baglan Bay Combined Cycle Gas Turbine (CCGT) in South Wales in reaction to a drop in energy demand caused by the recession. Similar factors have also led to E.ON putting back the development of its Drakelow gas-fired generator in Derbyshire. Given the concerns over a potential tightening of the supply-demand balance this decade, delays of this type could make matters worse and support energy prices. Indeed, in revealing its Baglan Bay plans as part of its annual accounts, SSE reportedly made suggestions regarding the scope for further price increases.
Expectations that energy demand will continue to be curtailed by the impacts of the recession will now see Baglan Bay begin operations in 2015. According to recent regulator and government data sets, the UK could see a supply problem around 2016 due to the closure of coal-fired facilities to comply with environmental regulations, as well as nuclear plants coming towards the end of their lifespan. Despite the decision on Baglan Bay, SSE still intends to increase its investment plans, and will be working on a number of projects, including an upgrade in Scottish transmission lines. This scheme is designed to enhance the prospects of renewable energy generation in Scotland.
SSE's annual accounts pointed to a three per cent increase in annual profits to ?1.29 billion. The level of profits has garnered calls for the company to cut its retail prices. However, Ian Marchant, Chief Executive of SSE, commented, "It's not in my gift. It depends on what happens to gas wholesale prices."