Scottish energy giant SSE to pump £12.5 billion into net zero plans: profits jump

SSE, the Perth-headquartered energy giant, has outlined plans to invest a bumper £12.5 billion over the next five years as it looks to accelerate its net zero plans.

The firm said the move makes it the biggest constructor of offshore wind in the world and will increase the amount of renewable energy produced by four gigawatts (GW) over the period.

SSE’s plans will see the group deliver a quarter of the UK's 40GW offshore wind target by 2030 and more than a fifth of the UK's electricity networks investment.

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Its increased spend on new energy generation is 65 per cent higher than previous commitments, with the company saying it intends to take advantage of the UK government's new super-deduction tax plans laid out earlier this year by Chancellor Rishi Sunak. It means for every £1 spent, the government will refund businesses £1.30 to encourage capex investment.

SSE is one the world's largest investors in on and offshore wind energy.

SSE – the recent subject of break-up speculation - will see 40 per cent spent on networks, 40 per cent on renewables and 20 per cent on the rest of the business.

Chief executive Alistair Phillips-Davies said: “In recent years we have made great progress in focusing the SSE Group on the delivery of the electricity infrastructure needed in the transition to net zero.

“We are constructing more offshore wind than anyone else in the world right now and expanding overseas, delivering the electricity networks needed for net zero and pioneering carbon capture, hydrogen and battery technologies to deliver system flexibility.

“Today's announcement means SSE will maximise its long-term potential and capture growth opportunities during a critical time for the energy sector, strengthening and growing its core businesses, creating jobs, delivering for wider society and offering attractive shareholder returns.”

The turbo-charged green investment plans came as the group revealed pre-tax profits for the six months to September jumped 116 per cent to almost £1.7bn, on a reported basis, thanks, in part, to the soaring energy prices experienced this year.

But the company's renewables division was hit by poor weather in the UK during the summer, with wind levels low and dry conditions impacting its hydro business.

Despite the high gas prices, SSE said it would continue to dispose of its 33.3 per cent stake in gas distribution operator Scotia Gas Networks in the financial year.

John Moore, senior investment manager at Brewin Dolphin, the wealth management firm, said: “These are a good set of results from SSE, but the announcement around its strategic direction is perhaps of more importance.

“In recent years the friction for the company has been between its need to invest in green energy infrastructure and generation and its desire to pay an attractive dividend – a dilemma of even more relevance in the post-COP26 world.

“What SSE has set out provides the framework for how the company will deliver that, maintaining its commitment to net zero along with its appeal as an investment proposition.

“SSE instinctively feels like a company that should benefit from the renewed focus on and greater appetite for sustainability, and translating this strategy into reality may be the starting point for a new phase for the company,” he added.

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