SSE outlines more ambitious green investment plans as gas prices increase energy company profits by 89%
- The Scottish group said it would now invest £18bn under its NZAP Plus scheme
- About half of the money will be spent on upgrading SSE’s power grids
- Gas prices soared in 2022 due to Ukraine war and Covid curb easing
SSE could fund up to £40bn of clean energy projects by the end of 2032, after revealed profits rose by more than £1bn last year.
The Scottish energy giant said it would invest £18 billion by 2027, or about £10 million a day, a 40 per cent increase on previous proposals under its Net Zero Acceleration Program (NZAP) Plus scheme.
About half of the investment will be spent on upgrading the company’s electricity grids, and another 40 percent on renewable energy generation, such as battery and solar projects.
Green plan: SSE said it would now invest £18bn as part of its Net Zero Acceleration Program (NZAP) Plus plan by 2027, a 40 per cent jump on a previous proposal
Spending on low-carbon electricity infrastructure pushed the company’s capital expenditures and investment levels to a record £2.8 billion over the past fiscal year.
A large part of this came from wind energy, including Seagreen in the North Sea, which generated electricity for the first time in August.
The plans also include Viking and Dogger Bank, which will be the world’s largest offshore wind farm when completed.
The investment followed an ambitious pledge from SSE in February 2022 to increase renewable energy output fivefold and reduce carbon intensity by 80 percent by the end of the decade.
SSE’s CEO Alistair Phillips-Davies said the new plan “raises the bar for our ambitions through 2027” and “provides a solid platform for growth in which we can invest up to £40bn over the next ten years”.
He added: “The energy landscape is changing rapidly and the macroeconomic and geopolitical environment has its challenges, but these are exciting times for SSE, and we have both the financial foundation and capabilities to pursue high-quality growth opportunities that will create value . for the coming years.’
Operating profit for SSE’s renewable energy division grew only marginally to £580 million last year, partly due to adverse weather conditions and the windfall tax on electricity generators.
By comparison, underlying revenues from its thermal and gas storage business rose by more than £900m as gas prices skyrocketed following the war in Ukraine and the easing of Covid-related restrictions.
Prices were also pushed up by low wind and solar production in summer 2021, rising demand across Asia, falling gas storage levels and a major fire at the Sellindge converter station in Kent.
As a result, the company’s total pre-tax profit rose to £2.2 billion for the 12 months ending March 2023, compared to £1.2 billion in the previous year.
SSE shares were up 1.8 per cent on Wednesday morning at £19.03, making them one of the top gainers on the FTSE 100 index.
Aarin Chiekrie, Equity Analyst at Hargreaves Lansdown, said: “Engineering with turbos for renewables is a bold and admirable move. But the shift to renewables comes with a hefty dose of risk – they’re not always reliable.
“To some extent, it’s at the mercy of Mother Nature. That reality hit last year when unusually calm and dry weather pushed the group’s renewable output lower than planned, meaning flexible gas-fired plants had to fill the energy gap.’