SSE announces plans to invest up to £40bn in low-carbon energy infrastructure24 May 2023
Massive projected investment over next decade will accelerate transition to cheaper, cleaner and more secure homegrown energy
- UK clean energy champion SSE unveils upgraded investment plan alongside strong full-year results which underline the benefit of its balanced, integrated business model
- Company lays out plans that could see it invest up to £40bn across the decade to 2031/32, with fully funded £18bn five-year investment plan to 2027
- New plan follows record £2.8bn investment last financial year – over 50% more than the Group’s adjusted profit after tax of £1.8bn
- SSE will plough profits back into critical infrastructure, while rebasing its dividend from 2023/24 to prioritise investment and growth
- The company is recruiting for more than 1,000 new green jobs every year
SSE, a leading electricity infrastructure company, has today laid out plans that could see it invest up to £40bn in the next decade, helping to deliver cleaner, more secure and more affordable energy.
The record-breaking investment programme will see the company ramp up its deployment of renewable energy, the vital network infrastructure to connect and transport it around the UK, and the flexible power sources to back it up when the wind isn’t blowing and the sun isn’t shining.
In doing so, it will be creating more than 1,000 new green jobs every year.
The plan comes as SSE publishes its financial results for full-year 2022/23, reporting a record investment of £2.8bn for the year – over 50% more than its £1.8bn adjusted profit after tax in the same period – as the company builds out critical energy projects including the world’s largest offshore wind farm at Dogger Bank.
The results reveal adjusted earnings per share increasing 75% year-on-year to 166p, in line with pre-close guidance, supported by a strong performance from the Group’s flexible generation and gas storage assets. SSE has continued to invest in optimising these assets despite challenging financial performance in recent years, and the market is now recognising the value they provide to an energy system in transition.
Strong financial performance, combined with increasing visibility over its pipeline of investment opportunities over the coming decade, has enabled SSE to update its previous capital expenditure plans, with the fully funded element of the plan increasing by more than 40% to £18bn.
The Group – whose origins stretch back 80 years to the first hydro schemes in the Scottish Highlands – is investing in electricity networks, onshore and offshore wind and solar, as well as developing new power generation and storage technologies including carbon capture, hydrogen, batteries and pumped hydro to back up an increasingly renewables-led energy system.
Alistair Phillips Davies, Chief Executive of SSE plc, said:
“The results that we have reported today represent profit with a purpose. They enable us to deliver record investment – far in excess of our earnings – in vital low-carbon energy infrastructure.
“They are also testament to the strength of our balanced business mix and net zero-aligned strategy, which sees us investing in the solutions to the energy crisis.
"This is a massive commitment to the UK and, at around £10m every single day, amounts to one of the largest clean energy investment programmes this country has ever seen – helping create and support thousands of new jobs and powering green growth from Shetland to the Isle of Wight."Alistair Phillips Davies, Chief Executive of SSE plc
“It is underpinned by supportive, long-term policy targets as the UK looks to consolidate its position as a world leader in clean energy technologies. Meeting these targets will require a massive step up in the pace of delivery on the ground and we are look forward to working with policymakers to make this happen. The sooner we can get projects built the quicker we can deliver the cheaper, cleaner and more secure homegrown energy system we all want to see.”
Commenting on the record investment programme, Chancellor of the Exchequer, Jeremy Hunt, said:
“Investment in Britain’s electricity infrastructure system is key to securing our energy supply as we transition to cheap, clean, home-grown renewables. Today's commitment from SSE is a further vote of confidence in the British economy.
“We have the second-largest offshore wind capacity in the world, with renewables providing 40 per cent of our electricity, and investment like this ensures long-term energy security, lower bills and thousands of jobs in our industrial heartlands.”
SSE plc Financial results for 2022/23: A strong year of delivery and growth
Key Financial Indicators
|Operating profit / (loss) by business £m||March 2023||March 2022||March 2023||March 2022|
|- SSEN Transmission||372.7||380.5||405.5||380.5|
|- SSEN Distribution||382.4||351.8||382.4||351.8|
|- SSE Renewables||580.0||568.1||446.3||427.8|
|- SSE Thermal & Gas Storage||1,244.4||331.1||1,338.7||749.6|
|- Other businesses inc. corporate unallocated||(50.3)||(100.6)||(2,719.2)||1839.8|
|Operating profit / (loss) £m||2,529.2||1,158.1||(205.6)||3,476.6|
|Profit / (loss) before tax £m||2,186.6||1,158.1||(205.6)||3,476.3|
|Earnings / (loss) per share (EPS) pence||166.0||94.8||(14.7)||241.2|
|Full year dividend per share (DPS) pence||96.7||85.7||96.7||85.7|
|Investment and capital expenditure £m|
|SSE Thermal & Gas Storage||159.5||125.5||71.6||70.8|
|Other businesses (inc project finance devex refunds)||247.1||10.8||1,074.3||563.6|
|Acquisition consideration £m||642.7||141.3||642.7||141.3|
|Investment, capital and acquisitions £m||2,803.3||2,067.8||3,831.4||2,441.3|
|Net debt and hybrid capital £m ||8,894.1||8,598.2||8,168.1||8,015.4|
Notes: 2021/22 numbers above restated to recognise Keadby 2 pre-commissioning revenues and costs in Income Statement following adoption of amendments to IAS 16 Property, Plant and Equipment - Proceeds Before Intended Use. The group focuses on Adjusted results as accounting conventions mean that Reported numbers include the impact of market volatility on forward commodity contracts do not reflect underlying operating performance. 2021/22 numbers above restated to recognise Keadby 2 pre-commissioning revenues and costs in Income Statement following adoption of amendments to IAS 16 Property, Plant and Equipment - Proceeds Before Intended Use.
In addition to the strong performance of its flexible power generation fleet and gas storage assets, the increase in Thermal’s adjusted operating profit also reflects additional capacity in the year from Triton Power, which was acquired on 1 September 2022.
Having experienced exceptionally still and dry weather in the prior year, Renewables volumes increased in the current year but were still around 13% behind planned levels due to less favourable weather than the long-term average and project delays.
However, strong overall financial performance helped the group continue to invest more than it made in profits with a record £2.8bn investment as it delivered:
- First power at Seagreen, Scotland’s largest and the world’s deepest tethered offshore wind farm.
- Continuing progress on building Dogger Bank, which will be the world’s largest offshore wind farm, with first power expected later this year.
- Completed laying the majority of a 260km subsea cable that will ultimately connect Shetland, the UK’s windiest region, to the GB electricity grid for the first time.
- Expanding into mainland Europe with the acquisition of 2.4GW onshore development platform in Spain, France, Italy and Greece.
- Commissioning Keadby 2, one of the world’s most efficient gas power plants.
- Beginning exploratory works on Coire Glas, which has the potential to be the UK’s largest hydroelectric scheme in 40 years, doubling GB electricity storage capacity.
In addition, the group paid more than £500m in taxes in the UK and has allocated £43m to the UK government’s Energy Generator’s Levy which came into effect in the final quarter of its financial year. The group contributed more than £6bn to UK GDP and supported over 40,000 jobs directly and indirectly. As previously announced, it is rebasing its dividend to 60p from 2023/24 to help fund its multiple growth opportunities.
Read the London Stock Exchange RNS here.
You can watch our live results and strategic update webcast from 10am here: SSE Preliminary Results for Year to 31st March 2023 and Strategic Update