Dogger Bank delay as storms hit output at SSE
Recent storms hit output at SSE’s renewables fleet as the Perth-based energy company also warned of delays to its giant Dogger Bank development.
Output over the first three quarters was about 15% below plan, or 10% lower relative to the full year, said the company in an update.
It was impacted by a combination of “mixed weather conditions, short-term plant outages and rephasing of flexible hydro output into the fourth quarter.” It said January has seen continued mixed weather conditions for the renewables fleet.
Good progress has been made by SSE Renewables at Viking in Shetland and at Yellow River in Ireland, where the first turbine has now been installed, as well as installation of the HVDC transmission system, cabling and foundations at Dogger Bank A.
However, turbine installation on Dogger Bank A has been affected by “challenging weather conditions” with vessel availability and supply chain delays further impacting progress.
Following notification of further vessel unavailability over the coming weeks there is an increasing possibility that full operations will not be achieved until 2025, although this is not expected to materially change project returns.
The business is working closely with its supply chain partners to improve current turbine installation rates, with a further update on progress to be provided in May with publication of FY24 Results.
In SSEN Distribution, the business demonstrated its operational effectiveness through ten named storms, two of which were classified as exceptional events.
In December, power was restored to 99% of customers within 48 hours during Storm Gerrit, despite 90mph winds impacting the North of Scotland. In January, Storm Henk impacted 60,000 customers in the South of England, with the teams outperforming estimates to restore all supplies within 48 hours.
Despite the setbacks, the business is still expected to deliver its guidance of more than £750m adjusted operating profit, including more than £75m from gas storage, for FY24.
The group said its final full-year earnings outturn remains subject to factors such as plant availability, supportive market conditions and normal weather across the remainder of the fourth quarter.
It remains on course to deliver adjusted investment and capital expenditure of around £2.5bn in FY24.
Work is under way on a number of projects including the Eastern Green Link 2 link from Peterhead to Yorkshire. SSEN Transmission also successfully issued a £500m 20-year green bond at a fixed coupon of 5.5%, which will be used to help finance critical national infrastructure projects.
Barry O’Regan, chief financial officer, said: “Whilst the quarter has seen the business navigate some short-term challenges, we reiterate and continue to focus on the delivery of our 2027 financial and operational growth targets established in the NZAP Plus.
“The strength of our balanced business mix and the growth opportunity it provides is aligned with a policy environment which increasingly recognises the essential role renewables, electricity networks and flexible power will play in the energy system of the future.
“Our long-term strategy remains unchanged and will deliver sustainable value for shareholders and society.”
John Moore, senior investment manager at RBC Brewin Dolphin, said: “Unfavourable weather has had a negative impact on SSE, showing it is not all plain sailing for the renewables sector even as the policy environment improves.
“Despite this, the company remains on target to meet its previous guidance for the year, with the transition to a rebased dividend that is part of its plans for shareholder returns combined with significant capex investment.
“SSE’s shares are down 10% in the year to date, but it has strong prospects and a good amount of momentum, putting the company in a strong position – even if inclement weather conditions cause a blip in performance in the short term.”