Investment case

SSE’S INVESTMENT CASE
  • UK-listed energy group focused on regulated electricity networks and renewables sources of electricity
  • Strategy to create value in the transition to net zero through developing, operating and owning green infrastructure
  • Commitment to remunerate shareholders' investment through dividends, with annual DPS targets set to 2023
  • Strategy underpinned by strong environmental, social and governance focus

STRATEGIC FOCUS ON REGULATED NETWORKS AND RENEWABLES

EXECUTING OUR STRATEGY

Developing, operating, owning

applying world-class skills and experience to the low-carbon infrastructure needed now and in the future

Creating value for shareholders and society,

earning profit from successful development, operation and responsible ownership of low-carbon assets; while delivering inclusive services, contributing to inclusive economic growth and sustainable jobs

Delivering in a sustainable way

being purpose-led, adopting four fundamental business goals aligned to the UN’s SDGs

OPPORTUNITIES THROUGH THE LOW CARBON TRANSITION

UK is the first major economy to legislate for ‘net zero’ emissions

  • Electrification of transport and heat
  • Maximising renewable energy sources key to achieving target
  • Central enabling role for electricity networks

Irish Government supports adoption of a net zero target by 2050

  • Aim for >70% of Irelands electricity from renewables by 2030
  • Commitment to carbon pricing as a core policy measure to reduce greenhouse gasses

SIGNIFICANT INVESTMENT OPPORTUNITIES IN THE FIVE YEARS TO FY25

£7.5bn capex plan across the five years to 2025*

Transmission

  • Business Plan includes £2.4bn Totex across the RIIO-T2 price control (FY21 – FY26)*
  • Could take RAV from £3.5bn to £5bn by 2025/26, excluding island links

Distribution

  • Leadership position in innovation
  • Aiming for strong finish to RIIO-ED1 (to FY23)

*subject to Ofgem final determinations

Offshore

  • 1,075MW Seagreen Wind Farm (SSE share 49%)
  • 3,600MW Dogger Bank Wind Farm (SSE share 50%)
  • £1.5bn equity investment net of project finance refunds across both projects

Onshore

  • 443MW Viking Wind Farm
  • 100% owned, £580m investment

FINANCIAL STRENGTH

Net debt/EBITDA range

  • Maintain net debt/EBITDA ratio at the lower end of a 4.5 to 5 times range from 2021-2025

Credit rating

  • Maintain credit ratios comfortably above those required for investment grade

Sharpening focus on core business

In progress

  • Gas Production Assets
  • Contracting

To be initiated

  • Walney Offshore Wind Farm
  • Multifuel

Further options

  • Partnering in Networks and Renewables
  • New debt issued in April & June 2020
  • Average debt maturity 6.5 years
  • £1.5bn cash and committed facilities

Refinancing requirements

  • No new financing requirement within the next two years, assuming £2bn disposals

2020/21 AND BEYOND

Download our full Investment Case here.

SSE Investment Case 22 July 2020