The increased investment was announced alongside the publication of its 2023/24 interim results.
The Group, which is a leading developer and operator of electricity infrastructure from wind farms to networks and flexible power generation, reports:
• Adjusted operating profit decreased by 3% to £693.2m;
• Adjusted profit before tax increased by 1% to £565.2m;
• Adjusted earnings per share was 37.0p, down 11% and reflecting the seasonal nature of SSE's operations that deliver the majority of annual earnings in the second half;
• Upgrading its fully funded five-year investment programme to 2027 to £20.5bn; and
• Reiteration of the Group's full-year adjusted EPS guidance of more than 150p.
The first half saw a strong performance from the Thermal business as it benefited from the addition of Keadby 2 and Triton power stations alongside improved availability of its other assets. In Renewables, profitability increased despite adverse weather conditions due to higher average hedge prices and lower hedge buy-back costs. In electricity networks, its Transmission business saw operating profits rise 3%1 while Distribution's operating profits were down 31% mainly as a result of inflationary costs which are expected to be recouped in future years, and storm costs.
Delivering world-class projects at the heart of the clean energy transition
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SSE has positioned itself at the heart of the clean energy transition with one of the largest investment programmes in the FTSE-100. During the first six months of 2023/24, it had capital expenditures of £1.1bn, delivering a range of nationally significant clean energy projects including:
• Achieving first power at Dogger Bank, which when complete will be the world's largest offshore wind farm capable of powering 6 million homes in GB.
• Completing full operational delivery of Seagreen, Scotland's largest offshore wind farm and the deepest tethered in the world, capable of powering up to 1.6 million homes.
• Installing the 260km subsea transmission cable that will connect Shetland to the GB mainland for the first time with full energisation of the link expected in 2024.
• Securing planning consent and the supply chain to deliver the Eastern Green Link 2, a joint venture with National Grid Electricity Transmission, that will install a subsea connection from Peterhead in the north east of Scotland to Drax in Yorkshire.
Planned capital investment increased to £20.5bn with double-digit EPS growth targeted to 2027
The Group has re-iterated its EPS growth forecast which is expected to deliver 13%-16% average earnings growth per annum over the five years to FY 2026/27 as it continues to build world-class electricity infrastructure. Between its existing operational asset base, and the capex investment committed to date, the group has increased visibility and certainty over around 95% of the targeted 2026/27 earnings estimate of 175p to 200p per share.
The strength of its financial position and greater clarity over electricity transmission projects has also led the Group to upgrade its investment programme to £20.5bn across the five years to financial year 2027. This is £2.5bn higher than its previous target with the additional spending also fully funded and focused on electricity infrastructure that will support the transition to net zero.
Commenting on the interim results SSE Chief Executive Alistair Phillips-Davies said: "Our first half performance reflects both the financial strength of our business and our ability to deliver world-class projects that are at the heart of the clean energy transition.
"There remains strong underlying political consensus on the big drivers of energy security and decarbonisation – accelerating renewables, network investment and flexible power generation – and these are the growth engines powering SSE.
"That we are investing more than £20bn over the five years to 2027 and could invest more than £40bn over the decade to 2032, speaks to the range and quality of opportunities we have, underpinned by an energy transition that is gathering pace, and our continued commitment to creating value for society and shareholders in a disciplined way."
