SSE plans to increase its clean energy investment by 14% to £20.5 billion for its current budget, after reporting better-than-expected profits for the first half of the financial year.
The FTSE 100 utility told investors it will add an extra £2.5 billion to its spending plan for the five years to the 2023-2024 financial year, most of which will be used to invest in renewable energy and upgrading the UK’s energy networks.
SSE chief executive Alistair Phillips-Davies said the company was prepared to accelerate its green ambitions as confidence in its future earnings had increased.
The company, based in Perth, Scotland, reported pre-tax profits of £565.2 million for the first half of the year, up 1% on the same months last year. SSE earlier this year set out plans to invest £40 billion in clean energy over the next decade, after almost doubling full-year profits compared to the previous year.
Phillips-Davies said the company’s profits are likely to continue growing because of the “continuing broad political consensus behind the need to build the electricity infrastructure needed for net zero”.
He added: “There remains a strong underlying political consensus on the big drivers of energy security and decarbonisation – accelerating renewables, network investment and flexible energy generation – and these are the growth engines driving SSE.”
SSE’s renewables portfolio made an adjusted profit of almost £87 million in the first half of the year, compared to £15 million in the same months last year, even as milder weather led to lower output from its wind farms.
Aarin Chiekrie, equities analyst at Hargreaves Lansdown, said SSE had hoped for a return to “more normal weather in the second quarter after a slow start to the year” for its renewable energy projects.
“But that did not happen, as adverse weather conditions resulted in production of renewable energy sources being 19% lower than planned. That means other parts of the business will have to catch up, leaving little room for further slippage if full-year expectations are compromised,” Chiekrie said.
The company’s fleet of gas-fired power stations, which are used to meet peaks in electricity demand, reported an adjusted profit of just over £226 million for the first six months of the year, down slightly from £248.2 million in the first half of last year. year.
SSE achieved an adjusted operating profit of £215.6m from operating its high-voltage transmission cables in the first half of the year, up 3% on the previous year. The local electricity grid division, which has been regulating revenues, reported a 31% fall in adjusted profits to £120.1 million for the first half, after rising costs in the supply chain.
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