Scottish and Southern to invest GBP3bn in Scotland as it steals no 2

SCOTTISH and Southern Energy (SSE) is to spend GBP3 billion of a near-GBP7bn investment programme in Scotland as it strives to double its wind farm capacity over next five years, the Sunday Herald has learned.

Details of the plans come as the Perthbased utility overtook a fading HBOS to become the largest Scottish company after RBS, with a stockmarket value of GBP13.1bn.

SSE also outlined plans to overtake Spanish-owned Scottish Power and Scottish Gas, part of UK giant Centrica, to become the largest power supplier in Scotland within the next five years.

SSE, which trades as Scottish Hydro Electric in Scotland, has earmarked GBP3bn to raise its renewable electricity capacity from 2GW to 4GW by 2013, having already spent GBP1.1bn acquiring Irish renewables firm Airtricity in January.

Half of the new money will be spent in Scotland, making a strong contribution to the Scottish government's target of achieving half of all energy from renewable sources by 2020.

SSE already operates some of Scotland's most prominent wind farms including Hadyard Hill in Ayrshire (120MW ), Braes of Doune in Stirlingshire (72MW ) and Minsca near Lockerbie (27MW ). New sites that have already received planning permission include Gordonbush in Sutherland (82MW ) and Fairburn in Ross-shire (40MW ).

SSE plans to spend a total of GBP1.25bn on wind energy in Scotland, with the remaining GBP250 million mostly being spent on upgrading hydroelectric facilities. The remaining GBP1.5bn of the investment earmarked for Scotland will be used to upgrade network infrastructure.

Chief executive Ian Marchant told the Sunday Herald: "SSE has the ambition and plans to help transform Scotland's energy infrastructure.

But realising these ambitions will require the right planning policy and delivery framework, and a concerted effort on the part of everyone with an interest in the energy sector in Scotland."

The GBP3.7bn investment beyond Scotland is being spent in England, Wales, and Ireland. It includes a GBP380m gas power station at Marchwood near Southampton and a GBP1.3bn joint venture with Texas-based Fluor to build the largest wind farm in the world, with 504MW capacity, at the Greater Gabbard site off the Suffolk coast.

The ending of its eight-year stint as Scotland's number two company marks the end of a grim week for HBOS, which plunged in value to little more than GBP12.4bn after fellow mortgage player Bradford & Bingley was forced to reduce the offer price for its rights issue.

While HBOS shares are down 30per cent since mid-May, SSE's are up 5per cent on the back of strong annual results.

The Perth company has doubled its customer base in the past six years to 8.5m on the back of a strategy combining low prices and strong customer service. In the past year alone, SSE has managed to attract some 700,000 new customers.

In an effort to catch up with Centrica, which still claims twice the number of customers, SSE has started employing regional directors to strengthen its panUK presence. It began by making veteran Calum Wilson the director for Scotland last spring, with a brief to develop the company's presence in the central belt.

By doubling the number of sales representatives, spending more than GBP2m on marketing and using one brand for all its services, the company has added about 130,000 net new customers over the year. It is now thought to have about 1.1m in Scotland as a whole, about 300,000 of them in the central belt.

Scottish Power, which remains the number one electricity supplier in Scotland, declined to comment on its rival's ambitions. But a spokesman pointed out that owner Iberdrola aims to spend 4.2bn (GBP3.3bn) in the UK in the next three years, including 1.2bn on renewables, most of which would be Scottish wind farms.

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