Annual profits at power generator and network operator SSE nearly doubled last year as soaring energy prices led to a boom for its gas-fired power plants.
The Perth-headquartered company also announced plans yesterday to further increase its record investment in low-carbon electricity even though output from its renewables division suffered from unfavourable weather conditions. The company runs hydroelectric plants and windfarms along with its gas-fired plants, and is in charge of electricity transmission across the north of Scotland and central southern England.
Adjusted pre-tax profits for the year to the end of March rose to £2.18 billion, up from £1.16bn the year before. Earnings from its gas-fired power plants surged almost four-fold to £1.24bn, compared to £331.1 million previously.
Referring to the results as “profits with a purpose”, chief executive Alistair Phillips-Davies said SSE will increase its five-year investment plan by 40% to £18bn. This follows a record £2.8bn investment in low-carbon electricity infrastructure last year.
“Action, not just ambition, is what is needed to provide lasting solutions to the problems of climate change, energy affordability and security, and with a record-breaking investment programme, that is what we are delivering,” he said.
“Through delivery of our societally-aligned strategy we are accelerating the build-out of renewables, reinforcing the networks needed to decarbonise, providing much-needed flexible generation, and working hard to ensure no-one is left behind in the transition to net zero.”
To help fund these investment plans, SSE said this coming year’s dividend will be rebased to 60p with annual increases of between 5% and 10% targeted for the next three years. A final dividend of 67.7p per share has been declared for the year to the end of March, raising the full-year pay-out by 12.8% to 96.7p.
Neil Shah, director of research at Edison Group, said yesterday’s updated investment plans underscore SSE’s dedication to renewable energy generation.
“Recognising the demand for affordable and renewable energy caused by the war in Ukraine, SSE’s growth plans are aligned with the UK government’s own net zero ambitions, and its record-breaking investment plan which includes investing £18bn out to 2026/27 or around £10m a day could deliver market-leading growth over the coming years,” he added.
About half of the money will be spent upgrading the group’s regulated electricity networks, with another 40% on renewable energy generation such as battery and solar projects. The remainder will go towards low-carbon flexible thermal generation and other businesses.
SSE was once one of the UK’s biggest domestic energy suppliers but sold its household supply arm to Ovo Energy in 2019 in a £500m deal so it could focus on developing renewable energy projects. The group pledged in February of last year to increase its renewable energy output fivefold and slash its carbon intensity by 80% by the end of this decade.
Much of last year’s green investment was spent on wind projects including Seagreen, Scotland’s biggest offshore wind farm and home to the world’s deepest offshore wind turbine.
Located almost 17 miles off the coast of Angus, SSE is developing the £3bn project in partnership with France’s TotalEnergies. It began generating first power last August and when fully operational will have 114 turbines generating 1.1 gigawatts of electricity annually, enough to power more than one million homes.
The company also reported continuing progress at Dogger Bank off the Yorkshire coast, which upon completion will be the world’s largest offshore wind farm. Once fully operational in 2026, it is expected to generate 3.6 gigawatts of power enough for six million homes.
SSE said it allocated £43m in the final quarter of the financial year towards the Energy Generator’s Levy (EGL), the windfall tax placed on power generators from January in the wake of last year’s soaring energy prices. The EGL is set to run until the end of March 2028.
Shares in SSE traded steadily throughout most of yesterday before a late afternoon jump to finish the day 30.5p higher at 1,900p, an increase of 1.6%.