SSE wins approval for $1.3 bln pumped storage plant in Scotland

LONDON, Dec 13 (Reuters) - British utility SSE (LSE: SSE.L - news) has won approval to build an 800 million pound ($1.3 billion) power plant in Scotland, although a lack of government support and high network costs may mean the project will not go ahead, the company said.

Scotland's Energy Minister, Fergus Ewing, granted planning consent on Friday for the 600 megawatt (MW) Coire Glas pumped storage power plant, which would store excess power produced by Scottish wind farms and release it again when needed.

The huge plant, which would take between five and six years to build and create 150 construction jobs, is now legally ready to be developed.

However, SSE said a lack of long-term policy support from the British government, which does not award renewable energy subsidies to pumped storage sites, and high transmission charges threaten the project.

"As things currently stand the framework and the mechanism that operate within the energy system would not enable us to make an investment decision to build Coire Glas," said an SSE (Munich: SCT.MU - news) spokesman, adding it was unlikely SSE would make a final investment decision on the project before 2015 at the earliest.

Pumped storage facilities have traditionally been used in Britain to even out low volumes of short-term electricity supply, and supporters believe growth in renewable energy, which tends to be intermittent, will make them more important.

However, as well as not supporting pumped storage in its existing renewable subsidy scheme, the government does not plan to include it in a new mechanism from 2018.

Grid connection charges for Coire Glas would also be more expensive than for other power plants because costs apply when electricity is taken from the grid and when it is supplied to the grid, both of which applies to pumped storage sites.

Britain currently has four operating pumped storage plants with a combined capacity of nearly 3,000 MW.