Energy giant SSE hikes net-zero investment and rejects break-up call after seeing profits rise
- SSE is speeding up its plan to become a net zero business, update reveals
- Group saw profits rise by 30% fresh figures reveal – but shares are down 4%
Energy giant SSE has revealed it plans to speed up its move to become a net zero company with a £12.5billion spending programme, which will deliver more renewable energy to the grid.
The announcement is part of its ‘Net Zero Acceleration Programme’ to boost clean growth, lead the energy transition and maximise value for stakeholders.
The plans also include five year targets for clean energy aligned with net zero and 1.5 degree temperature rises.
Quicker: Energy giant SSE has revealed it plans to speed up its move to become a net zero company
Under the investment plan, which represents £1billion of additional capital expenditure per year over its previous spending programme, SSE will expand its renewable power five fold to 50 terrawatt hours a year by 2031.
Alistair Phillips-Davies SSE chief executive, said: ‘We are constructing more offshore wind than anyone else in the world right now and expanding overseas, delivering the electricity networks needed for net zero and pioneering carbon capture, hydrogen and battery technologies to deliver system flexibility.’
The group British posted a 30 per cent rise in interim pre-tax profits and increased its spending plans despite a drop in renewable power output.
Adjusted pre-tax profits for the six months to 30 September came in at £174.2million, up from £133.9million in the same period last year.
Profits were boosted by higher volumes and revenue allowances in its regulated network business and a strong performance from non-core businesses such as its gas storage site, the company said, offsetting a fall in renewable power generation.
Renewable power output was down 25 per cent compared with the same period last year, which SSE said was due to ‘exceptionally unfavourable weather conditions,’ such as low wind speeds.
SSE said it would continue to dispose of its 33.3 per cent stake in gas distribution operator Scotia Gas Networks in the financial year.
The sale of SSE’s 33 per cent stake in Scotia Gas Networks to Ontario Teachers’ Pension Plan Board and Brookfield Super-Core Infrastructure Partners is expected to be complete within the 2021/22 financial year.
Shares in the company are currently down 4.31 per cent or 71.5 points to 1,586.5p. A year ago the group’s share price was 1,348p.
Russ Mould, investment director at AJ Bell, said: ‘SSE’s pivot towards renewables has been well-timed.
‘Having sold its household energy supply and services firm at the beginning of 2020, it is not directly exposed to the current energy crisis, where even the larger operators will be running many loss-making accounts as the wholesale cost of gas and electricity soars above fixed tariffs.
‘The company’s first half results saw the company double down on its commitment to clean energy as it outlined plans for a multi-billion pound investment funded by the sale of a 25% stake in its network distribution arm.
‘This is unlikely to be sufficient to get activist investor Elliott off its back, which having joined the shareholder register earlier this year has been reportedly pushing for SSE to take more radical action and separate the renewables assets from the grid business.
‘The rationale for such a move is that it could see SSE lifted to the more elevated market valuations enjoyed by other firms which concentrate purely on renewables.
‘However, today’s first-half results perhaps offered an indication why SSE is resisting such a move, at least for the time being.’