Iberdrola ramps up sustainability transformation with $920mn Scottish Power fossil fuel sale
As Scottish Power sells off its last remaining fossil fuel business, parent company Iberdrola has become the first 100% renewable energy company in the UK.
This week, Scottish Power sold off some of its facilities to coal and biomass business Drax in a deal worth $920mn which involved almost 2.6GW of fossil fuels and hydro generation capacity.
The Iberdrola subsidy has sold four combined-cycle gas turbine plants in England, totalling 2GW; two hydro plants in Scotland, totalling 126MW; and a pumped hydro storage plant in Scotland with a capacity of 440MW.
Iberdrola hopes that the deal will free it up to invest in renewables and power grids in the UK. It has come away from all fossil fuels and is now focusing on wind power. The company is transforming its strategy to tackle climate change and the Drax deal forms part of its €3bn asset rotation plan set out in its Strategic Perspectives 2018-2022.
The group’s chairman and CEO, Ignacio Galán, said the UK is “a key market for us, and one of the present and future pillars of the group, where we will invest £5.5bn ($7.23bn) by 2022, primarily in increasing our renewable capacity, developing more and smarter grids and offering more personalised and efficient solutions to our customers”.
Currently, Iberdrola owns a total of 22.7GW of wind power capacity (installed or under construction) and has more than 3GW in the pipeline.
Drax advances biomass strategy with Pinnacle acquisition
The Group’s enlarged supply chain will have access to 4.9 million tonnes of operational capacity from 2022. Of this total, 2.9 million tonnes are available for Drax’s self-supply requirements in 2022, which will rise to 3.4 million tonnes in 2027.
The £424 million acquisition of the Canadian biomass pellet producer supports Drax' ambition to be carbon negative by 2030, using bioenergy with carbon capture and storage (BECCS) and will make a "significant contribution" in the UK cutting emissions by 78% by 2035 (click here).
This summer Drax will undertake maintenance on its CfD(2) biomass unit, including a high-pressure turbine upgrade to reduce maintenance costs and improve thermal efficiency, contributing to lower generation costs for Drax Power Station.
In March, Drax secured Capacity Market agreements for its hydro and pumped storage assets worth around £10 million for delivery October 2024-September 2025.
The limitations on BECCS are not technology but supply, with every gigatonne of CO2 stored per year requiring approximately 30-40 million hectares of BECCS feedstock, according to the Global CCS Institute. Nonetheless, BECCS should be seen as an essential complement to the required, wide-scale deployment of CCS to meet climate change targets, it concludes.