SSE commits to five-year dividend plan



SSE has reiterated its commitment to a five-year dividend plan to March 2023, with guidance on full-year adjusted earnings per share due later this year.

A trading update for the energy provider noted that it expects capital expenditure and investment will total around £2bn in 2021/22 – net of project finance development expenditure refunds.

SSE is seeking to add to its pipeline in renewables and has submitted bids, with its partners Marubeni and CIP, for a number of sites through the ScotWind seabed leasing process.

Scottish and Southern Electricity Networks (SSEN) Distribution published its stakeholder-led draft business plan for 2023 to 2028, setting out how it will deliver improvements for customers and accelerate investment in networks to power communities towards net zero emissions.

The plan includes £4.1bn of investment, representing an increase of around 35% and would see SSEN Distribution’s regulated asset value increase to over £6bn, from around £4bn.

Progress continues to be made on SSE’s disposals programme which is on course to realise more than £2bn from the sale of non-core assets and businesses that are not a good fit with the group’s net zero strategy.

The sale of SSE’s contracting business to Aurelius, first announced on 1 April, was completed on 30 June.

As reported in May, SSE has initiated a sale process for its stake in SGN, targeting an agreed sale by the end of the calendar year.

Construction continues to progress on SSE’s major projects in transmission and renewables, including building the world’s largest offshore wind farm at Dogger Bank, Scotland’s largest offshore wind farm at Seagreen and one of Europe’s most productive onshore wind farms at Viking on Shetland; as well as the associated link connecting the island to the mainland.

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SSEN Transmission remains on track to submit Initial Needs Cases to Ofgem for the Skye Reinforcement this summer and the Argyll 275kV upgrade this autumn.

A Final Needs Case for the first of two planned high-voltage, direct current links from Peterhead to England is also expected to be submitted by the end of 2021.

In June, SSE announced the appointment of two new non-executive directors, Elish Angiolini and Debbie Crosbie, both of whom will join the board and nomination committee on 1 September.

Finance director Gregor Alexander said: “We have delivered on our purpose through the coronavirus pandemic and are continuing to progress growth opportunities and options arising from our net zero strategy.

“We have an enviable offshore wind pipeline which we are seeking to expand and diversify, options to develop new thermal and pumped storage hydro technologies that will be vitally important in the transition to net zero, and we see significant growth potential in our regulated electricity businesses.“

“This represents an exciting future for SSE, and we look forward to updating the market on our capital expenditure and investment plans at our interim results in November.”

Output of electricity from renewable sources in which SSE has an ownership interest across the UK and Ireland was 403GWh, or around 19%, which was below plans, mainly due to weather conditions.

Output of electricity from SSE’s gas-fired generation plant for the three months to 30 June was also around 9% lower than in the same period in 2020, reflecting plant availability and market conditions.

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Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “Unfortunately this sort of thing is an inevitable consequence of relying on the, never reliable, British weather for as much as a third of the group’s total output.

“On the plus side, the group’s far more reliable distribution business – a straightforward utility – continues to do well, with increasing investment boosting regulatory capital and the amount of profit the group is permitted to make.”

Stuart Lamont, investment manager at Brewin Dolphin, commented: “SSE’s dividend is a vital part of the investment case for the company, and it has reiterated its commitment to RPI-linked increases until 2023.

“There is, however, a case to be made that some of the capital could be re-directed after this date towards investment in the changing energy environment.

“That said, SSE’s disposal programme has strengthened its balance sheet, simplified the business, and focussed it more on the transition to net zero.”

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