Picture: SSE Chief Executive Alistair Phillips-Davies at our HVDC converter station in Shetland
Following our full-year results announcement in May 2024, our Chief Executive Alistair Phillips-Davies gives a strategic overview of a strong year of delivery.
Powering sustainable growth
The work we are doing to accelerate the construction of renewables assets, provide critical flexible generation back-up and transform electricity networks goes to the very heart of a long-held purpose that is building a better world of energy. Renewables, flexibility and networks are the foundations of the future energy system and we have the skills, world-class assets and development pipeline to deliver it.
The same diversified business mix that performed so well in 2023/24 gives us the optionality to pivot our investment plans to where the best opportunities exist in the clean electricity value chain. In this way we are powering sustainable growth. Right now, that growth – and associated value creation – are coming through networks and renewables, and this is reflected in the adjustments we made in the year to capital allocation across the Group with 90% of our fully-funded £20.5bn Net Zero Acceleration Programme Plus (NZAP Plus) investment programme geared to these two areas, particularly as we get enhanced visibility of growth in our core regulated transmission business.
As the UK and Ireland’s clean energy champion, there are significant tailwinds behind our core business and broad political and societal consensus on the need to slow climate change. Supportive market design will be key to SSE playing its part and we welcomed the bulk of the UK Government's long-awaited Review of Electricity Market Arrangements that will accelerate reform of the energy system. We also welcome the more strategic approach to network planning and continue to advocate for the deployment of more renewables, greater ambition on flexible generation technologies and streamlined planning and consenting frameworks for networks.
Delivery, resilience and growth
We can look back on 2023/24 as a year in which we accelerated the delivery of a strategic plan that is making significant inroads to a future energy system that is cleaner, secure and more affordable.
"It was another year of record investment, with £2.5bn spent on critical national infrastructure"
as we pushed ahead with our fully-funded capex programme to 2026/27 and reached a number of delivery milestones on our flagship infrastructure projects. At the same time we met our financial objectives, achieving the higher end of our guided range of full-year adjusted Earnings Per Share as the resilience of our diversified business mix proved its worth yet again.
It is all the more pleasing that progress in the year was accompanied by a significant reduction in our greenhouse gas (GHG) emissions. Performance against our climate targets represented the lowest value on record for SSE’s total GHG emissions, scope 1 GHG emissions and carbon intensity. This was mainly attributable to a reduction in thermal generation output in the year and we will continue to track closely the progress we are making against interim science-based targets.
SSE's continued success is dependent on the talent and commitment of our highly-skilled employees and contract partners, and getting them home safe at the end of each working day remains our top priority. We were therefore deeply saddened by the loss of Richard Ellis, the employee of a contract partner, who died in an offsite incident in October 2023. Among direct employees we matched our best safety performance year, but this was of course overshadowed by Richard's death. We are redoubling efforts to ensure everyone at SSE is kept out of harm's way, and with a growing workforce – we filled over 4,000 roles last year – safety remains front of mind.
Delivery of a climate-focused strategy
One measure of the strategic progress we are making is the various milestones reached in the year on major infrastructure projects within SSE's two growth engines: networks and renewables. Working with our joint venture partners, the construction of SSE Renewables’ flagship projects continued to progress, with Scotland’s largest offshore wind farm, Seagreen, completed in the Firth of Forth. We also made good progress at Viking, on Shetland, and Yellow River and Lenalea in Ireland, while construction got under way at onshore sites in France and Spain. These are highly complex projects, however, and not without risk, as we have seen with Dogger Bank A which has been impacted by poor North Sea weather, installation vessel availability and supply chain delays with completion now expected in the first half of 2025.
At the same time, SSEN Transmission has been delivering critical grid infrastructure that is vital to the future energy system. Good progress was made in the year on enabling work for the Eastern Green Link 2, or EGL2, which is the High Voltage Direct Current (HVDC) undersea link from Peterhead to Yorkshire. Elsewhere, major RIIO-T2 projects moved ahead at pace, notably with the pioneering HVDC Shetland link where all 260km of the subsea cable was laid in 2023 and the project remains on track for full energisation in summer 2024.
Resilience in a complex energy landscape
We operate in a highly dynamic energy landscape that is best navigated with a blend of diverse technologies and revenue streams. Our very deliberate mix of market-facing and economically-regulated businesses spans the clean energy value chain and offers stable economic returns for the Group as a whole, while providing multiple options for continued investment.
"The agility of the Group business model has enabled us to pivot capital to where it will have the biggest impact on net zero and create the greatest value."
And while SSE Renewables and SSEN Transmission are the current drivers of growth, with Transmission in particular offering a ‘once in a generation’ growth opportunity, they are complemented by other businesses that contribute to delivery of our climate-focused, value-creating strategy.
SSE Thermal offers much of the system flexibility needed for energy security and secured significant capacity contracts in the year; SSEN Distribution is transforming itself and investing to electrify streets and homes as demand for its services increases; SSE Energy Markets is managing risk, navigating market volatility and securing value for our assets; and our customer businesses are ensuring a valuable route to market with new products and systems, bringing energy users with us on the road to net zero. As the constituent parts of a strategically cohesive group, these are quality businesses that are creating lasting value. Detail of how all of our businesses have played their part in the past year can be found in the following pages.
Growth beyond the five-year plan
Looking beyond the NZAP Plus, we see more growth to come. With steady regulatory earnings and well-established infrastructure, electricity networks have long been an under appreciated part of the energy system. An impending surge in demand has changed all that. SSEN Transmission is required by its licence conditions to deliver £20bn of upgrades to the network in the north of Scotland under the Large Onshore Transmission Infrastructure (LOTI) and Accelerated Strategic Transmission Infrastructure (ASTI) frameworks, with additional investment of at least £5bn earmarked for early delivery in the north of Scotland in Ofgem's Beyond 2030 plan.
And we have an enviable development pipeline of energy assets that will be needed for net zero too. Renewables projects like Berwick Bank, Seagreen 1A, Coire Glas and Arklow will be complemented by future auction possibilities and other opportunities in our home markets and abroad. There is also a range of flexibility options across different technologies, from batteries and pumped storage hydro to carbon capture and storage and hydrogen.
On course with the NZAP Plus
"For now, our primary focus is on delivery of our five-year plan and the lasting value it will bring to shareholders and society."
Much of the anticipated NZAP Plus growth is factored into the later years of the plan, and some 60% of the forecast earnings is regulated and inflation-linked. This – combined with a fully-funded investment plan; strict capital discipline; quality assets and people; a resilient business mix; and a strong balance sheet with the majority of debt held at fixed rates – gives us every confidence in our guidance to 2026/27.
View our FY2-23/24 full-year results PDF.