ScottishPower earnings hit after energy crisis allowance payment drops off

The Spanish-owned power company made big gains in its renewables and network businesses, despite a one-off hit to its supply arm.

ScottishPower also builds and operates wind farms in the UK (Tom Leese/PA) (PA Wire)

ScottishPower said its earnings fell 11% in the first half of the year to just over £1 billion, after an energy crisis allowance payment in 2023 from Ofgem was not repeated this year, affecting its bottom line.

The company saw significant gains in its network and renewables arms, while earnings in its customer supply business took a nearly 70% year-on-year hit to fall to £175 million.

The fall in earnings from its supply arm, which serves households and businesses, was because ScottishPower was handed an allowance in 2023 year by Ofgem to help it manage the energy price crisis in recent years, which was not repeated this year.

Chief executive Keith Anderson said: “We’ve seen a solid financial performance in the first half of the year, driven by our long-term investments in the clean energy assets Britain needs to deliver energy security and affordable power for decades to come.

“Our investment strategy is closely aligned with the UK’s ambitions to be a clean energy superpower and we continue to progress our high-quality project pipeline across grids, renewables and clean energy technologies.”

As well as supplying energy to retail customers and companies, ScottishPower also builds and operates onshore wind farms.

Its renewables business saw a 62% jump in profit to £387 million, driven by favourable market conditions and weather across the period.

In its network business, meanwhile, the company operates the high voltage electricity transmission system which sends electricity to local power stations in the south of Scotland.

It also runs the network of towers, transformers and cables that carry electricity from the transmission grid to areas in central and southern Scotland, Merseyside, North Wales and parts of Cheshire and Shropshire.

The energy sector is one of the UK’s biggest growth drivers and we’ve injected over £2 billion into the economy over the first six months of this year

Keith Anderson, chief executive

Its network business earnings grew 32% to £443 million, due to changes in pricing allowed by regulators.

ScottishPower said it invested £1.1 billion into its network and operations in the first six months, and handed out more than £1 billion in supply chain contracts to more than 550 companies.

Mr Anderson added: “The energy sector is one of the UK’s biggest growth drivers and we’ve injected over £2 billion into the economy over the first six months of this year.

“This shows how businesses big and small, right across the supply chain, can benefit from the country’s clean power mission.”

Separately, ScottishPower’s owner, the Spanish infrastructure giant Iberdrola, raised its outlook for the year, saying it expects double-digit growth in net profit to more than £8 billion.

Iberdrola is the world’s largest wind power producer, and bought ScottishPower for £11.6 billion in 2007.