Britain's SSE plans net zero investment boost as profit tops forecast

Susanna Twidale
Updated ·2 min read
FILE PHOTO: An SSE company logo is seen on signage outside the Pitlochry Dam hydro electric power station in Pitlochry

By Susanna Twidale

LONDON (Reuters) -SSE Plc on Wednesday said it planned to spend about 14% more on capital investment under its five-year net zero programme to 2026/27, after the British power generator and network operator's half-year profit topped its own forecast.

Britain is aiming to ramp up its renewable power capacity to meet its goal of net zero emissions by 2050, and become more independent of imported energy following supply disruption caused by the Russia-Ukraine conflict.

SSE has a target of 9 gigawatts (GW) of renewable capacity by 2026/27, up from around 4 GW now. It is developing major wind farms off the coast of Britain but said it would be disciplined about new investments.

"When we cannot see attractive returns from contracts, or where seabed (for offshore wind projects) is too expensive, we will exercise discretion in our decision making," it said in the results statement.

The offshore wind sector has been hit by surging supply chain and interest rate costs over the past year with some developers cancelling projects.

SSE CEO Alistair Phillips-Davies said Britain would need to offer higher prices in its next renewable subsidy auction to attract offshore wind projects after an auction earlier this year failed to secure new capacity.

"Obviously 44 pounds ($54.9)/MWh wasn’t enough last time," he said on a call with journalists on Wednesday.

Without giving an exact figure he said the next British auction would need to reflect higher costs in the market, and pointed to a recent auction in Ireland where projects secured an average of 86 euros per MWh as successful.

SSE has increased its capital investment outlook on the Net Zero Acceleration Programme Plus to 20.5 billion pounds ($25.58 billion) from 18 billion pounds earmarked earlier.

The company reported adjusted earnings per share of 37 pence for the six-months ended Sept. 30, above its prior forecast of at least 30 pence.

The power firm reaffirmed its fiscal year 2024 adjusted profit expectations of more than 150 pence per share. Analysts on average are expecting annual earnings per share of 156.06 pence, according to LSEG data.

($1 = 0.9207 euros)

(Reporting by Susanna Twidale in London, Aatrayee Chatterjee and Aby Jose Koilparambil in Bengaluru; Editing by Sherry Jacob-Phillips, Kirsten Donovan)