SSE has announced an update to its four core business goals for 2030, aligned with the United Nations Sustainable Development Goals and linked to executive compensation.
The four targets increase SSE’s climate ambition in line with its Net Zero Acceleration Program (NZAP) and reflect the extent to which SSE has already achieved its previous targets set in 2019.
The updated targets are to reduce the carbon intensity of Scope 1 by 80%; build a renewable energy portfolio to produce at least 50 TWh; enable 20 TWh of renewable generation, two million electric vehicles and one million heat pumps on its transmission and distribution networks.
The business update also announced that the Perth-headquartered energy group is revising its expectation for adjusted earnings per share for the year 2021/22 to at least 90p – from at least 83p.
This reflects the “strength and stability provided by the balanced mix of regulated and market-oriented businesses” of SSE, including the strong financial performance of thermal and flexible hydropower plants, which more than compensate for lower renewable energy production. forecasts.
SSE intends to recommend an annual dividend of 81p per share plus RPI for 2021/22 and continues to target an RPI-linked dividend in 2022/23, followed by a rebasing to 60p in 2023/24 and at least 5% increases in 2024/25 and 2025/26.
SSE remains on track to report annual capital expenditure in excess of £2bn.
Net debt is expected to be approximately £9 billion at March 31, 2022, assuming proceeds from the sale of SSE’s 33.3% stake in SGN are received before the end of the year.
Following its success at the ScotWind seabed lease auction last month, SSE Renewables is expected to participate in the New York Bight seabed auction on February 23, where six leases are available.
SSE also recently announced its intention to participate in the next tenders for the 1.4 GW Hollandse Kust (West) wind farm area in the Netherlands, which will take place in the first half of 2022.
The group reported progress on its £12.5 billion capital expenditure and investment plan. In November, financial close was completed on Dogger Bank C, while construction continues on the Dogger Bank A&B offshore wind farms, as well as the Viking onshore wind farm.
First power from the Seagreen offshore wind farm is scheduled for the second quarter of this year and is expected to begin full commercial operation in January 2023.
Elsewhere, commissioning is currently underway at SSE Thermal’s 893 MW combined cycle gas turbine plant at Keadby 2 and will be followed by a performance validation period before delivery in the fourth quarter.
SSE has also partnered with Equinor on two new carbon capture projects – Keadby 3 and Peterhead – which have formally gone through the UK government’s cluster sequencing process.
Chief Financial Officer Gregor Alexander said, “SSE’s performance over the year gives us renewed confidence in delivering strong financial results for the full year.
“Coupled with the progress made on our investment plans over the past few months, this also highlights the value we are creating for all stakeholders through the continued execution of our net-zero aligned strategy.
“The significant strengthening of the SSE Renewables pipeline, the increased visibility we have into SSEN Transmission’s increased growth opportunities, and the balance provided by SSE Thermal during a turbulent business period have once again demonstrated the value of the SSE’s integrated business mix and its ability to deliver sustainable returns to shareholders over the long term.”
Electricity generation from renewable sources in which SSE has a stake in the UK and Ireland (excluding pumped storage) was 1.4 TWh at the end of last year, 19% below expected in the nine months to December 31, mainly due to the unusually calm and dry summer months in the UK and Ireland.
This shortfall represents 13% of the total annual production forecast.
At the end of November, 135,000 homes in SSEN’s license area in the north of Scotland were affected by Storm Arwen.
In response to this one-of-a-kind weather event, SSEN mobilized over 1,000 employees who worked in extreme conditions to restore supply to customers.
Electricity generation from the SSE gas-fired plant for the nine months to December 31, 2021 was approximately 14% lower than the same period in 2020, reflecting plant availability and market conditions.
Flexible thermal generation continues to play a key role in UK energy markets as the country transitions to net zero, with its role now focused on creating value by providing vital balancing services to enable a system based on renewable energies.
“Its profitability is therefore less dependent on the volume of its production and the financial performance for the year should be ahead of plan,” the financial report notes.
Stephen Wheeler took over as Chief Executive of SSE Renewables on January 1.
He was part of the successful management team that developed the Airtricity renewable energy platform before SSE acquired it in 2008. He previously spent more than 10 years working with ABB and Siemens at scale international.
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