SSE has today announced its Preliminary Full-Year Results for the year to 31 March 2018 during which adjusted profit before tax was down 6.0% to £1,453.2m. SSE recorded revenues across the UK and Ireland of £31,226.4m, up from £29,037.9m in 2017. In the Republic of Ireland, revenues increased in the last financial year to £818.8m from £746.6m. The full statement can be viewed here and performance highlights across SSE’s Wholesale, Retail and Enterprise businesses in Ireland to 31 March 2018 are below.
2018 marks ten years since SSE plc acquired renewable energy developer Airtricity Limited in February 2008 and entered Ireland’s competitive energy market. In the ten years since, the company has directly invested over €2.5 billion in the development of Ireland’s sustainable, low carbon energy infrastructure. SSE owns and operates 2,027MW of thermal and renewable generation capacity on the island of Ireland, with 735MW coming from onshore wind, making SSE the largest generator of renewable energy in the all-island Single Electricity Market. SSE’s retail arm in Ireland and Northern Ireland, SSE Airtricity, is the second largest energy supplier on the island, providing greener electricity, natural gas and essential services to home and business customers.
Creating value in a sustainable way
SSE has again published an economic impact report alongside its financial results. The study, which was commissioned by SSE and conducted by professional services firm PwC, demonstrates the scale of economic activity that SSE’s operations support across Ireland and the UK.
In Ireland, 2017/18 was another strong year, with SSE contributing €806m to Irish Gross Domestic Product (GDP), equivalent to 0.3% of GDP. This latest figure takes the company’s overall contribution to the Irish economy to more than €6bn over the last seven years. The study also revealed that SSE supported 4,520 jobs in Ireland last year, equivalent to 0.2% of total Irish employment. To read the full report click here.
In 2017, SSE Ireland was also certified for the first time by Business in the Community Ireland (BITCI) to the Business Working Responsibly Mark, the ‘gold standard’ for Corporate Social Responsibility and Sustainability in Ireland.
Stephen Wheeler, Managing Director of SSE Ireland, said:
“Looking back on the year gone by, and SSE’s first ten years in Ireland, I’m immensely proud of what our business has achieved. Since we entered the market here in 2008, we’ve grown to become the second largest energy utility, and leading developer and generator of renewable energy, on the island. In that time, we’ve directly invested over €2.5bn in the development of Ireland’s sustainable, low-carbon energy infrastructure, with four new onshore wind farms developed in the last 16 months, including Ireland’s largest in Galway.
“Our retail business, SSE Airtricity, is leading the industry in how we serve our customers, with a multi award-winning team and a growing suite of digital customer service channels, meeting the changing needs of households and businesses alike.
“And we continue to develop platforms for future growth. Offshore wind is a prime example. In Ireland, we have an incredible wind resource off our coast, and we believe it’s now time to harness that power and bridge the gap to our 2020 EU renewables targets and beyond. For our part, we’re progressing plans to fully develop our Arklow Bank Wind Park project in the Irish Sea, which would represent an investment of over €1bn and deliver a minimum of 520 megawatts of capacity.
“Most importantly, I believe we have the people. We have a talented, experienced and ambitious team of around 1,000 people, fully committed to delivering for our customers, our colleagues, our communities and our shareholders.”
SSE’s 2030 carbon reduction ambition in Ireland and the UK
Across the UK and Ireland, SSE has over 11,160MW of capacity for generating electricity. Its most material environmental impact is the carbon dioxide emitted when generating electricity and so it has an important part to play in supporting the transition to a low carbon energy system.
Following the UK’s Climate Change Act 2008, which targets a reduction of at least 80% in emissions of carbon dioxide and other greenhouse gases between 1990 and 2050, SSE set itself a target to cut the carbon intensity of the electricity it generates (g/kWh) by 50% between 2006 and 2020. That target was first met in March 2017.
Both Ireland and the UK ratified the Paris Agreement in 2016, committing to undertake ambitious efforts to combat climate change and adapt to its effects. The Irish Government’s National Mitigation Plan, published in 2017, reaffirmed its commitment to decarbonising the energy mix through specific actions to achieve its 2050 target of an 80 to 95% reduction in greenhouse gases compared with 1990 levels. In the UK, there is ongoing consensus to meet the ambitions of the 2008 Climate Change Act, exemplified by the work of the UK Committee on Climate Change and by the content of the UK Government’s Clean Growth Strategy.
It is in this context that SSE has considered its carbon intensity ambitions for the period to 2030. SSE is now setting a new, longer term ambition for the carbon intensity of the electricity it generates, and aims to reduce the carbon intensity of its electricity production across Ireland and the UK by a further 50% by 2030, based on 2017/18 levels. This means that SSE’s electricity generation carbon emissions are now forecast to be around 150 gCO2e/kWh by 2030, which also represents a 75% cut based on its original 2006 baseline. This target is consistent with the Paris Agreement.
This 2030 carbon reduction ambition follows the announcement last week that SSE Ireland has joined other Irish businesses represented on the Leaders’ Group on Sustainability, a new coalition convened by Business in the Community Ireland (BITCI) and dedicated to addressing sustainability priorities and opportunities, to sign a Low Carbon Pledge for Ireland. This is the first such dedicated public commitment generated by Irish business and aims to lead on the transition to a low-carbon economy by reducing Scope 1 & 2 carbon emissions intensity by 50% by 2030.
Generating and supplying energy across the island of Ireland
SSE’s performance highlights across its Wholesale, Retail and Enterprise businesses in Ireland to 31 March 2018 are below.
Generating value from onshore wind
2018 marks ten years since SSE’s acquisition of Airtricity, and over the past decade SSE has developed strengths in the efficient development, construction and operation of onshore wind. To date, SSE’s focus has been on completing Renewable Obligation (RO) projects in the UK and REFIT projects in Ireland.
SSE’s onshore wind farm capacity now stands at 1,917MW, of which 735MW operates in Ireland’s Single Electricity Market. Seven new onshore wind energy projects have been delivered across the UK and Ireland in the last 16 months, and all have come in under budget. These include Ireland’s largest wind farm Galway Wind Park, co-developed with Coillte (169MW, SSE share 120MW), and Leanamore Wind Farm in Co. Kerry (18MW), which was delivered in the second half of 2017/18.
SSE’s onshore wind farm pipeline consists of around 800MW of potential new build projects and extensions. In Ireland, SSE awaits the outcome of the Irish Government’s consultation on the development and design of a new Renewable Electricity Support Scheme (RESS). At present, there is no indication of a further UK Contracts for Difference auction for onshore wind. In both jurisdictions, SSE continues to explore future development options for onshore wind and is well placed to take advantage of future opportunities as they emerge.
Continuing to invest in offshore wind
Offshore wind represents a huge opportunity for SSE to deliver its own decarbonisation ambitions and contribute to the achievement of the UK’s and Ireland’s carbon targets. Part of the value of SSE’s offshore wind farm assets is their geographic diversity around the UK, which provides a spread of wind capture opportunities. Existing offshore wind continues to hold possibilities of growth through more efficient operation, better targeting of operations and maintenance (O&M) investment or enhancements to revenue streams. The joint venture operations of SSE’s existing offshore assets have created strong commercial partnerships and resulted in shared industry learnings.
SSE continues to develop its expertise in offshore wind, primarily through the Beatrice Offshore Windfarm joint venture (588MW - SSE share 40%) located in the Moray Firth off the north-east coast of Scotland, which is making excellent progress towards its construction milestones and which will contribute to earnings from mid-2019/20.
SSE has interests in three further offshore wind prospects under development including Arklow Bank (520MW) in Ireland. SSE wholly owns this consented site off the coast of Co. Wicklow in the Irish Sea and awaits the outcome of the Irish RESS to see whether offshore wind will be eligible for support.
Securing capacity contracts in Ireland
In January 2018, the results of the first competitive capacity auction under Ireland’s new Integrated Single Electricity Market (I-SEM) were published. All units at each of SSE’s four thermal plant in Ireland (Great Island CCGT (464MW), Rhode (104MW), Tawnaghmore (104MW), and Tarbert (590MW)) secured I-SEM capacity contracts at the auction clearing price of €41.8/kW. The new I-SEM capacity contracts will be from October 2018 until September 2019. Capacity market revenue will be received throughout the delivery year. Generators that fail to provide energy when called upon will be subject to financial penalties.
Supplying energy and essential services across Ireland
In Ireland's all-island energy market, SSE's retail arm SSE Airtricity is the second-largest provider of energy and related services across the Republic of Ireland (ROI) and Northern Ireland (NI), and the only retail energy brand operating in each of the competitive gas and electricity markets across the island.
At 31 March 2018, SSE Airtricity supplied electricity and natural gas to 0.74 million household and business customer accounts in ROI and NI, reflecting a fall in household customer numbers due to increased competitive pressures, particularly in electricity markets. Adjusted operating profit for SSE Airtricity decreased to £33.0m in FY2017/18, from £42.7m in the previous year, due to a combination of the impact of increased competition and increased energy costs. SSE’s retail arm recorded revenues across ROI and NI of £917.6m, up slightly from £865.5m in FY2016/17.
Focused cost-management alongside competitive product pricing ensured that SSE Airtricity continued to deliver value to existing and new home energy customers, while enabling further investment in digitised service offerings, including the introduction of a new video-chat customer channel. As a result, SSE Airtricity was named Best for Customer Service in February 2018 for the second year running by leading Irish internet comparison site Bonkers.ie.
In NI, SSE Airtricity increased household electricity prices by 7.5% from 1 October 2017 while in ROI electricity prices increased by 5.6% from 1 November 2017. These were the first such increases in both markets since 2013 and were as a result of increases in the cost of supply including wholesale and regulated networks costs. On 1 April 2018, SSE Airtricity increased its regulated natural gas prices in NI by 7.8% for home and small business customers. This increase was examined and approved by the NI Utility Regulator.
SSE Airtricity Business Energy increased customer load across the island by 12% in the 12 months to 31 March 2018, while the company's Eco team has facilitated energy efficiency initiatives that are saving businesses almost 110GWh of primary energy annually. For the second year running SSE Airtricity received the highest supplier satisfaction rating (81%) in the Irish SME electricity market, according to the latest Annual Survey published by the Commission for Regulation of Utilities.
In April 2018, SSE Airtricity announced a 40% acquisition of Activ8 Solar Energies, a leading supplier of Rooftop Solar systems to home and business customers, with an option to acquire a further 10 per cent after two years. The acquisition marks yet another step forward in the development of the company’s commercial and domestic energy services solutions.
SSE's Energy Markets trading team in Ireland is at the final stages of preparation for the introduction of the Integrated Single Electricity Market (I-SEM) this year, under which new balancing obligations will be established. Through Power Purchase Agreements (PPAs) the team is providing a competitive route to market under ISEM for other generators and actively manages over 640MW of third party facilities through PPA contracts, an increase of 220MW in FY17/18.
Playing to the core strengths of Enterprise
SSE Enterprise is a group of businesses that provides energy and telecoms services to industrial, commercial and public sector customers across the UK and Ireland. To fulfil that need the business has developed the capacity to build, own, operate and maintain assets. Its four business areas are: Contracting, Utilities, Telecoms and Rail.
There is a pipeline of significant opportunities which the four Enterprise business streams are well placed to tap into. These include bigger and better opportunities in mechanical and electrical, energy storage, distributed energy, electric vehicle infrastructure, fibre networks, 5G infrastructure, and rail power and communications infrastructure.
In Ireland, SSE is part of a consortium which has submitted a 'Detailed Solution' as part of a competitive bid process for the National Broadband Plan, being carried out by the Irish State.