SSE boosts drive for multi-billion dollar investments in clean energy

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British energy group SSE has announced plans to ramp up its push for multibillion-dollar investments in clean energy projects and networks, unveiling a nearly 90% rise in profits for the full year.

SELFone of Britain’s largest renewable energy players, now plans to invest £18bn by 2027 and potentially up to £40bn over the decade as profits soar to £2.2bn, helped by rising of electricity and gas prices.

The FTSE 100 energy company’s investment injection is approximately 40-50% higher than previous plans outlined last year.

The vast majority is expected to go to the UK and Ireland, where SSE owns its core portfolio of gas-fired power stations, grids and wind turbines.

About half of its planned £18bn investment by 2027 will go into electricity grids, with renewable electricity generation, mainly offshore wind turbines, expected to get 40%.

Alistair Phillips-Davies, chief executive, said the update followed “strong financial performance” over the year, as well as the “resilience” of its business and balance sheet.

However, he said it would require “the right policies and commitments from the government,” adding: “We have a lot of projects ready to shovel, what we’re encouraging the government and policy makers to do now is get into delivery mode.”

SSE also said it had abandoned moves to sell a minority stake in its UK electricity distribution network, having concluded the sale was not necessary ‘at the present time’.

In November, it sold a 25% stake in its UK electricity transmission grid to the Ontario Teachers’ Pension Plan for £1.5bn to help raise funds for investment.

SSE’s adjusted pre-tax earnings for the full year ending March 2023 increased by 89% from £1.6 billion to £2.2 billion. The biggest increase came from its gas assets. The adjusted operating profits of its gas-fired power stations rose by 244% to just over £1bn.

The plants benefited from extreme increases in UK wholesale electricity prices last year amid tight electricity markets due to factors such as disruptions to the French nuclear fleet affecting supplies of electricity in Great Britain. Old nuclear power plants in Britain have also shut down.

Gas-fired power plants can scale up or down quickly to respond to shortages when prices are high. SSE also purchased a new gas-fired power station, Triton Power, during the year, and opened another, Keadby 2, in Lincolnshire.

In a blow to the government as it seeks to bring down energy billsSSE said it expected an “environment of higher and sustained prices over the medium term”.

The UK government introduced an extraordinary tax on low-carbon electricity generators last year as concerns grew that they were making excess profits from high electricity prices.

It came into effect in January 2023 and cost SSE £43m. The tax does not apply to gas-fired power plants.

Under plans, SSE will pay a dividend of 96.7 pence per share this year before rebasing to 60 pence for 2023/24 to help finance its investments. It therefore aims for annual increases of 5-10% until 2026/27.

The updated investment proposals are a boost for the UK government, with the country facing increasing competition for investment from the US and Europe, where large subsidies are on offer.

British Chancellor Jeremy Hunt said the plans were “another vote of confidence in the British economy” and would help ensure “energy security, lower bills and thousands of jobs”.

Shares of SSE were stable at £18.60 in London in the early afternoon.