Economy

UK Energy Titan SSE Says Low Wind, Driest Conditions in 70 Years Hit Renewable Generation

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  • SSE's renewable assets produced 32% less power than expected between April and September as low speeds and dry conditions hit wind and hydro output.
  • The summer was "one of the least windy across most of the UK and Ireland and one of the driest in SSE's Hydro catchment areas in the last seventy years," the company said Wednesday.
  • German utility RWE and Denmark's Orsted also warned about the impacts from low wind speeds.

Energy giant SSE said its renewable assets produced 32% less power than expected between April 1 and Sept. 22 thanks to historically dry and low-wind conditions. This equates to 11% of its full-year output target.

"This shortfall was driven by unfavourable weather conditions over the summer, which was one of the least windy across most of the UK and Ireland and one of the driest in SSE's Hydro catchment areas in the last seventy years," the Perth, Scotland-based company said Wednesday in a statement.

Low-wind output over the summer has contributed to the European energy crunch, which sent power prices to record highs in recent days. Other factors include a colder-than-expected winter last year, production cuts during the pandemic, low imports from Russia, high carbon prices and growing demand from Asia for liquefied natural gas.

SSE is not the first renewable energy producer to warn about the financial impacts from the summer's slow wind speeds.

In August, German utility RWE reported "much lower" wind volumes across its Northern and Central Europe portfolio for the first half of 2021.

Danish energy company Orsted made similar comments, saying "earnings from our offshore and onshore wind farms in operation were DKK 0.3 billion lower compared to the same period last year."

"The increased generation capacity from new wind farms in operation was more than offset by significantly lower wind speeds across our portfolio," the company said in August, while reiterating it expects to meet its full-year financial targets.

More specifically, Orsted said that during the second quarter, wind speeds averaged 7.8 meters per second, which was "significantly lower" than normal speeds of 8.6 meters per second.

Still, SSE's management on Wednesday emphasized that these operational issues are "time limited." Management noted that performance over recent months was also impacted by hedging requirements in volatile markets.

Despite the summer slowdown, SSE said it "remains confident" about delivering on its financial goals for the full year. The company also announced an expansion into the Japanese offshore wind market.

— CNBC's Anmar Frangoul contributed reporting.

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