SSE rejects break-up call and boosts green investment
SSE is investing more in renewables (pic: Terry Murden)
Energy company SSE has rejected calls to break up the group and is raising its investment in renewables and selling up to 25% in its electricity network business.
It said that selling minority stakes in SSEN Transmission and SSEN Distribution will enable it to unlock growth to the fullest whilst maintaining an attractive balance of capital allocation across the group.
The company, which had been facing break-up calls from an activist investor, will increase its capital investment by two thirds to a net £12.5bn by 2026 – £1bn more annually – to support the global push to decarbonise.
The new programme will see SSE enable delivery of over a quarter of the UK’s 40GW offshore wind target by 2030 and over 20% of the necessary upcoming electricity networks investment in the UK, as well as continuing its international expansion.
SSE has also set out today a new, growth-enabling dividend plan from 2023/24, paying at least £3.50 per share across the five years.
It will rebase its dividend to 60 pence in 23/24, before targeting at least 5% dividend increases in 24/25 and 25/26.
Looking further ahead, SSE has set out a series of ambitious targets for the next decade to 2031. These include delivering a fivefold increase in renewables output, increasing renewable and other low-carbon generation capacity to more than 16GW, including new flexible technologies such as carbon capture and storage, hydrogen and batteries.
The new investment programme was announced alongside SSE’s financial results for the six months to September 2021, in which the company expressed its confidence in delivering solid financial performance for the full year.
Adjusted operating profit was up 15% to £376.8m and adjusted profit before tax up 30% to £174.2m, reflecting the post-Covid recovery across a number of its affected businesses and despite the impact of unfavourable weather conditions on renewables output during the period.
Alistair Phillips-Davies, SSE Chief Executive, said: “After all the commitments made at COP26, now is the time to deliver.
“Our Net Zero Acceleration Programme represents the next phase of SSE’s growth and involves a substantial ramping up of investment – equivalent to nearly £7m each day in low-carbon infrastructure – backed up by clear delivery and funding plans.
“Today’s announcement will maximise our long-term potential and capture growth opportunities during a critical time for the energy sector, creating jobs, delivering on government ambitions, and creating value for society and shareholders.”