Global trends
10th February 2012
Barclays – finance developments
10th February 2012

SSE & Airricity – driving competition

airtricity With a market capitalisation of around £12 billion, and employing almost 20,000 staff, SSE plc is the broadest-based energy utility in the UK and Ireland. The company is also one of the most significant investors into Northern Ireland and is one of the major drivers of competition in the energy market to benefit the Northern Ireland economy and the consumer.

SSE’s energy supply brand, Airtricity, is Northern Ireland’s fastest-growing electricity supply brand and now supplies over 80,000 home and business customers with cheaper electricity. A wholly-owned division of the Perth, Scotland, based SSE plc, which is listed in the FTSE Top 40, Airtricity is the first energy utility to enter Northern Ireland’s competitive domestic electricity supply market.

Airtricity Managing Director Stephen Wheeler says the company is determined to build on its success since it entered the domestic electricity market in June 2010 and has recently launched a range of new domestic energy products to deliver savings for NI households.

“We recognise the increasing financial pressures placed on households in terms of a whole range of bills. That is why we are determined to deliver Credit meter customers switching to Airtricity two year fixed term discounts that offer 14% savings in Year 1 and 8% savings in Year 2. With a third of Northern Ireland’s domestic electricity market using Pre-payment meters we want to make sure these customers can also make savings and we are offering prepayment meter customers in the market additional discounts of 10% on Power NI keypad rates.” It’s estimated that Northern Ireland domestic energy consumers could save around £65 million this year if every household in the country switched to Airtricity for cheaper electricity (savings are based on a typical household consumption of 4,500 kWh per annum).

In the commercial energy sector, Airtricity supplies one fifth of the SME market. Following the company’s entry into the Northern Ireland commercial market almost 10 years ago, Airtricity now supplies around 15,000 business customers with cheaper electricity that’s green too – helping to drive down the cost of doing business for Northern Ireland firms of all sizes. The energy supplied by Airtricity to Northern Ireland commercial electricity customers is fully exempt from the HMRC Climate Change Levy.

In addition to supplying over 80,000 home and business customers in Northern Ireland with cheaper electricity, Airtricity has made a very real and significant investment into doing business in Northern Ireland.

Airtricity’s energy supply business in Northern Ireland has an operating turnover in excess of £100 million and growing. Airtricity employs 150 full-time and contractor roles in Northern Ireland to support its growing domestic and commercial electricity supply business. This includes employing 20 full-time staff as well as 100 sales contractors to support domestic electricity sales. The company’s total employee numbers also includes 25 sales contractors to support Airtricity’s business energy unit.

“Northern Ireland has one of the best wind resources across Europe presenting substantial opportunity for the country,” Mark Ennis, Executive Chairman SSE Ireland, comments. “With European Union legally enforceable targets requiring Northern Ireland to reduce carbon emissions by 16 percent by 2020, Northern Ireland must make significant progress in the delivery of renewable energy. With its abundant availability of renewable energy resource the region is uniquely placed to benefit environmentally and economically from this new sustainable energy focus.”

SSE plc has over 11,000MW of electricity generation capacity, over 2,000MW of which is generated from renewables sources. The company’s core goal is to decarbonise the electricity it generates by 50 percent by 2020. To reach this target,the company is actively developing renewable generation along with carbon efficient thermal power.

SSE is the largest single investor in renewables across the island and to date has invested almost £1billion in renewable generation in Northern Ireland and the Republic of Ireland. SSE powers its energy supply brand Airtricity (which currently supplies over half a million customers across the island) with over 500MW of renewable energy from the island’s largest wind generation portfolio.

In Northern Ireland, the company operates six wind farms generating 79.1MW of renewable energy, making it the No.1 renewable energy generator in the region. In addition, the company has around 100MW in construction or with consent for development.

The energisation of SSE’s latest wind farm, the 27.6 MW Slieve Kirk near Derry/Londonderry, represented a significant milestone for wind farm developments in Northern Ireland, Paul Cooley, General Manager – Ireland at SSE Renewables, remarks. “The project marks the first-ever grid connection in Northern Ireland by an energy utility other than Northern Ireland Electricity. Substantial savings were made because the connection was “contestable”, that is, it was done through an Independent Connection Provider, Powerteam, rather than the Distribution Network Operator.”

The green electricity generated by SSE for Airtricity results in 94 per cent LESS CO2 emissions per MWh than the average of electricity supplied on an all-island basis. In total, 95 per cent of Airtricity’s electricity demand in Northern Ireland is from renewable resources – making Airtricity the No.1 renewable energy supplier in the market (Fuel Mix Disclosure, published by NIAUR, 2011).

As Ireland’s leading wind farm developer, Airtricity/SSE is committed to sustainable development in Northern Ireland and to being a long-term member of the local community. As well as its significant environmental benefits, wind energy brings welcome economic benefits through local authority rates, land rental, community funds, local civil infrastructure upgrades and increased demand on a variety of local businesses. During construction SSE Renewables also seeks, wherever possible, to provide employment and source materials locally.

Over the lifetime of the current installed capacity of almost 350MW of wind energy generation in Northern Ireland, it’s estimated that over £70 million will be paid directly into the country’s local economy through landowner payments, local council commercial rate payments, and community fund contributions alone. As such, the wind energy industry is one of the largest current and future net community contributors to the Northern Ireland economy.

SSE, which operates 79.1MW of installed capacity in Northern Ireland to power Airtricity, has already directly invested £2 million to date in local commercial rates, community funding, and landowner payments – including over £500,000 which has been paid directly in commercial rates to local authorities in Northern Ireland to fund regional services and infrastructure. These direct payments into the local economy will continue for the lifetime of our wind farms.