Todd Gillespie
Thu, September 7, 2023
(Bloomberg) -- SSE Plc is reconsidering investing in the US as financial pressure on offshore wind projects makes the nation less appealing.
Chief Executive Officer Alistair Phillips-Davies said troubles like those cited by rival Orsted A/S put the country lower on its list of possible new markets. UK-based SSE, one of the world’s largest developers of offshore wind, has talked for several years about potentially investing in the US.
The Inflation Reduction Act was a driver for many European renewable energy companies to do business in the US, but that appeal is starting to sour amid anxiety about rising interest rates and supply-chain bottlenecks. Orsted shares plunged last week after it warned that uncertainties over US tax credits might prompt it to abandon planned projects.
“One difficulty at the moment would probably be doing something in the US,” Phillips-Davies said in an interview in London. “There are probably still unanswered questions in people’s minds as to what’s happened [with Orsted] or how big the issues are in the US.”
SSE’s hesitancy is another blow for plans to grow offshore wind in America, where President Joe Biden’s administration is targeting a jump to 30 gigawatts of the technology by the end of this decade from almost nothing now.
SSE has more than nine gigawatts of offshore wind in its pipeline in the UK and Ireland, and plans to spend £40 billion ($50 billion) building clean-energy assets by 2032. That spending includes work on Dogger Bank off the east coast of England, which will be the world’s largest offshore wind farm.
“Not many people really understand what it takes to build an asset over in the US,” Phillips-Davies said. “You’ve seen cost of capital go up, and you’ve seen supply chain being substantially challenged.”
Simultaneously, the company has considered Germany, Poland and the Netherlands for potential new projects.
“Where there is an energy system and a set of regulations and markets that we understand, solar and battery are things that we’d add in” alongside wind, he said.
Phillips-Davies also refused to rule out buying Norfolk Boreas, the 1.4 gigawatt offshore wind project halted by Swedish developer Vattenfall AB in July.
“I wouldn’t dismiss anything,” he said, noting that SSE made an unexpected acquisition of gas-fired power plants last year.
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