The Perth-headquartered company, whose integrated operations stretch from renewables to regulated electricity networks, plans to invest in cutting edge developments including some of the world's largest offshore and onshore wind projects, critical network upgrades, hydrogen, carbon capture and storage (CCS), and hydro-electric power.
Assuming a continued supportive policy environment, the Group's current investment plans will see it investing significantly more than it makes in profits over the next few years in order to realise its growth opportunities and accelerate the transition to net zero. This will include:
• radically increasing renewables capacity, with a fivefold increase in output by 2031;
• upgrading electricity networks to support increased demand; and
• investing in low-carbon flexible generation such as pumped hydro storage and CCS.
In doing so, SSE's plans will enable the delivery of more sustainable homegrown energy by reducing reliance on imported gas and helping keep costs down for consumers in the future. This includes delivering around a fifth of the UK's offshore wind generation targets and planned network investment.
Independent analysis by PWC found SSE contributed £5.8bn to UK GDP in 2021/22, supporting more than 45,000 jobs both directly and indirectly. It also found that for every £1 earned by SSE in adjusted operating profit in 2021/22, it made an economic contribution of £4 to the combined UK and Irish economies.
The investment update came as part of SSE's full-year financial results for 2021/22, with the Company posting strong performance in volatile market conditions thanks to its integrated business mix and balanced portfolio of electricity assets and infrastructure.
Alistair Phillips-Davies, Chief Executive Of SSE said: "We've already achieved a lot, but we're only just getting started. Against the backdrop of a global gas crisis, we are investing far more than we are making in profit to deliver clean homegrown energy that will bolster security, cut emissions and make energy more affordable over the long term – with plans to invest more than £24bn in Britain alone by 2030 to help deliver Government's ambitious targets.
"These results demonstrate the strength of our strategy and highly complementary business mix, the passion and commitment of our people, and our ability to deliver for all our stakeholders as we create thousands of jobs and contribute billions to GDP."
Business and Energy Secretary, Kwasi Kwarteng, said:
"This is a significant investment from SSE and a huge vote of confidence in our energy security plans. SSE will help make our energy cleaner and cheaper, while supporting high quality, green jobs right across the UK."
A strong performance with good strategic and operational progress
SSE reported adjusted operating profit of £1.5bn, up 15% year-on-year as lower Renewables output due to unfavourable weather were offset by a stronger performance from the Company's flexible generation assets including hydro and gas-fired power stations, which provided a critical role maintaining security of supply. This enabled the company to deliver adjusted earnings per share of 95.4p, within its 92p – 97p pre-close guidance range.
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This came as SSE invested a record £2bn in capital expenditure for the year as it set out to deliver its £12.5bn NZAP, announced in November.
The company made good strategic and operational progress including building the world's largest offshore wind farm, Dogger Bank; Scotland's largest and the world's deepest tethered offshore wind farm, Seagreen; and what will be one of Europe's most productive onshore wind farms, Viking, on Shetland. The Transmission business is currently constructing the electricity cable which will connect Shetland to the UK mainland for the first time in history, securing the island's energy supply and transporting renewable energy to the national electricity grid. It is also developing part of the multibillion-pound Eastern Link "superhighway", which will run 270 miles under the North Sea, connecting the North of Scotland to the rest of the UK.
The Company is also developing flexible technologies like pumped storage at Coire Glas in the Highlands, Carbon Capture and Storage projects at Peterhead and Keadby, as well as battery and hydrogen technologies at multiple sites.
SSE also confirmed it expects to deliver earnings per share in FY23 of at least 120p and upgraded its guidance on earnings for the five-year period to March 2026. This reflects the strength of the Company's balanced business mix and the significant growth opportunities available to it right across the energy value chain.
The UK and Ireland's clean energy champion
In November 2021, SSE published details of its fully-funded Net Zero Acceleration Programme: a £12.5bn five-year strategic capital investment plan to 2026 focused on the delivery of electricity infrastructure needed in the transition to net zero. In 2021/22 alone, SSE invested a record £2bn as it delivered the initial stages of this programme.
This included:
• In Renewables, where SSE is currently building more offshore wind than anyone on the planet, constructing flagship projects such as its Dogger Bank, Seagreen and Viking windfarms. It bolstered its renewables pipeline with success in the ScotWind offshore wind leasing auction, the acquisition of an 80% majority stake in Japan-based offshore wind development platform SSE Pacifico, and latterly agreed to acquire around 3.9GW of early-stage onshore wind projects across Southern Europe as part of the Siemens Gamesa Renewable Energy platform, along with scope for up to 1GW of co-located solar projects.
• Continuing to invest in upgrading its electricity networks with SSEN Transmission making good progress building the first ever direct electricity link between Shetland and the mainland. When complete in 2024, it will provide increased energy resilience to islanders and transport the region's significant renewable energy resources to areas of high demand. The Group's SSEN Distribution business also battled to restore power in the face of extreme weather events including the equivalent of over two years of overhead line faults in just 12 hours across the North East of Scotland.
As previously announced, SSE intends to sell a minority stake in both its Transmission and Distribution businesses to help fund its growth opportunities and rebalance capital allocation across the Group. It recently started a sales process for a 25% share of the SSEN Transmission business, primarily due to the fact that its growth is clearer given that its price control runs ahead of SSEN Distribution's. A decision on the timing of a similar stake sale in SSEN Distribution will be made in due course.
• In its Thermal business, the Company continued to develop ground-breaking carbon capture and storage projects at Keadby and Peterhead, and further developed plans for what could be the world's first hydrogen-fired power station at Keadby, as well as a hydrogen storage facility at Aldbrough in the North East. Along with SSE Renewables' plans to build the UK's first pumped storage project for more than 30 years at Coire Glas in the Scottish Highlands, and a growing pipeline of solar and batter projects in Distributed Energy, these projects give SSE significant opportunities to add to its portfolio of flexible generation assets that will be essential in balancing a renewables-led energy system.
SSE is proud of its ESG commitments and this year announced an upweighting of its interim 2030 business goals, which are aligned to the UN's Sustainable Development Goals. This revision is to keep pace with the bolder ambitions set out in the Net Zero Acceleration Programme. The goals will see the Company cut carbon intensity by 80%; increase renewable energy output fivefold; enable low-carbon generation and demand; and champion a fair and just energy transition on the journey to net zero.
SSE's current projects include:
• Constructing the world's largest offshore wind farm at Dogger Bank, off the cost of East Yorkshire, with partners Equinor and ENI;
• Building the UK's largest onshore wind farm in Shetland, as well as the high voltage transmission link that will connect it to the mainland;
• Seagreen offshore wind farm, which will be Scotland's largest and is expected to be operational next summer, with Total;
• Developing, with Equinor, what could be the UK's first carbon capture and storage facility and the world's first major 100% hydrogen-fuelled power station in Keadby, in Lincolnshire;
• Investing in the UK's first major hydro pumped storage project in more than 30 years at Coire Glas in the Scottish Highlands, which would play a critical role by providing power for up to 3 million homes for 24 hours when the wind isn't blowing.
