Scottish Hydro Electric and Southern Electric will develop further power generation projects in England and Wales following their £5bn merger announced earlier this week.
Rapid expansion of their combined 1,800MW presence in the English power generation market was a key factor behind the decision to join forces.
The new company, Scottish and Southern Energy, is expected to press ahead with construction of new plants after the deal is completed. ‘It gives us bigger financial clout to be able to do them,’ said a spokesman for Hydro-Electric.
Hydro’s main generating assets in England are a 680MW gas-fired turbine plant at Keadby in Yorkshire and a 50% stake in the 750MW Seabank combined-cycle gas turbine (CCGT) near Avonmouth, due on stream later this year. It also has a big portfolio of smaller combined heat and power plants.
Southern has minority stakes in two large CCGTs, the 915MW station at Barking in east London and the 660MW station at Medway in Kent, and in the 215MW co-generation plant at Derwent. It also wholly owns four smaller units.
A second CCGT at Keadby is a possible project, while smaller schemes could be pursued by Sabre Power, the joint venture Southern set up last year to develop plants of up to 45MW.
A spokeswoman at Southern said the merger would not affect the venture, which is subject to shareholder and regulatory approval.
The two companies also expect to gain economies of scale for the creation of the largest distribution company in the UK with a 3.3m customer base.
Some savings will come by rationalising head office and other functions, such as customer billing.
Both companies played down potential job losses. Hydro chief executive Roger Young, who will become Scottish and Southern Energy’s deputy chief executive, said they would be ‘insignificant’ and achieved where possible by natural wastage.