Scottish Power profits drop amid soaring wholesale gas prices

Scottish Power has reported a 39% drop in underlying profits at its division that delivers gas and electricity to households, as it was hit by soaring wholesale energy costs and low wind volumes.

Keith Anderson, Scottish Power’s chief executive, said the energy crisis was “a stark reminder of why we have to decarbonise our energy sector quickly and efficiently”.

The company, one of Britain’s biggest energy suppliers, which is owned by the Spanish company Iberdrola, made earnings before interest, tax, depreciation and amortisation (Ebitda) – a measure of underlying profit – of £83m at its UK retail business in the first nine months of the year, down £54m from a year earlier.

Retail customer numbers at the end of September were flat compared with a year earlier, at 4.5 million, and it delivered 8% more gas and 10% more electricity than a year earlier. Overall, including its renewables and network divisions, Scottish Power’s Ebitda totalled £1.1bn, down 9.3% from the same period last year.

The renewables business contributed underlying profits of £370m, down 16.5%, while SP energy networks, which owns and operates the electricity transmission and distribution network in central and southern Scotland, Merseyside and Cheshire, reported Ebitda of £656m, up 1.3%.

Like other energy suppliers, Scottish Power has been hit by the surge in natural gas prices to record levels on financial markets. High gas prices have crippled smaller suppliers and 16 have gone bust so far this year, which means millions of customers have been moved to the remaining bigger suppliers.

Prices of wholesale gas have soared partly because of low storage levels after an especially cold winter in Europe last year, as well as because of increased energy demand from Asia, while low wind speeds have reduced output from renewables. This year has been one of the UK’s least windy summers since 1961.

Anderson noted that the Cop26 summit starts in the company’s home city of Glasgow in three days, and claimed that Scottish Power had transformed its business model in the six years since the landmark Paris climate agreement. “We closed our coal plants and are proud to have played our part in Scotland being coal-free since 2016.”

He said Scottish Power had invested £10bn in renewable energy projects and smart digital grid networks. “All of this during the ongoing energy crisis and the likelihood of a difficult winter. The energy price spike is a gas issue and a stark reminder of why we have to decarbonise our energy sector quickly and efficiently.”