REG - SSE Plc - Q3 2021/22 Trading Statement

SSEAnnouncement

08/02/2022 07:00

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RNS Number : 9503A  SSE PLC  08 February 2022

SSE plc

Q3 2021/22 TRADING STATEMENT

8 February 2022

 

·      Upgrading 2021/22 adjusted earnings per share to at least 90
pence

·      Reporting early progress with SSE's Net Zero Acceleration
Programme

·      Announcing a refreshed set of net zero-linked business goals for
2030

This Trading Statement upgrades SSE's financial outlook for the 2021/22
financial year and sets out the Group's key strategic developments and
operational performance in the quarter ended 31 December 2021.

Financial outlook

SSE is upgrading its expectations for full-year 2021/22 adjusted earnings per
share to at least 90 pence from at least 83 pence.  This reflects the
strength and stability provided by SSE's balanced mix of regulated and market
facing businesses, including good financial performance from flexible thermal
and hydro plant which is more than offsetting lower than planned renewables
output.

SSE intends to recommend a full-year dividend of 81p per share plus RPI for
2021/22 and continues to target an RPI linked dividend in 2022/23, followed by
a rebase to 60p in 2023/24 and at least 5% increases in 2024/25 and 2025/26.

SSE remains on track to report full year 2021/22 capex in excess of £2bn. Net
debt is expected to be around £9bn at 31 March 2022, assuming the proceeds
from the disposal of SSE's 33.3% stake in SGN are received prior to the
year-end.

Strategic delivery

·      Transmission growth: On 31 January National Grid Electricity
System Operator (NGESO) published this year's Networks Options Assessment
(NOA), which indicated the need for more than £5bn of investment in
electricity transmission infrastructure in the North of Scotland to maintain a
pathway for net zero. These investments and the clear need to accelerate
reinforcements to unlock ScotWind start to provide a clear line of sight on
and tangible progress towards SSE RAV growth forecasts. SSE's Net Zero
Acceleration Programme (NZAP) set out a target range for SSEN Transmission's
gross RAV of £8-10bn by 2031 with a path for gross RAV to reach £12bn by
2031 in the event of an acceleration of reinforcement expenditure.

·      ScotWind success: With its JV partners Marubeni and Copenhagen
Infrastructure Partners (CIP), SSE successfully bid for the E1 East site in
the ScotWind seabed leasing auction. This was SSE's preferred site, being well
located for both grid connection and transmission charges, with a potential
capacity of at least 2.6GW / 1GW net. This takes SSE's current secured
pipeline to around 11GW with further opportunities in development to grow this
to the sustained 15GW target.

·      International opportunities: SSE Renewables is set to take part
in the New York Bight seabed auction on 23 February, where six leases are
available. SSE also announced plans to enter bids into the upcoming tenders
for the 1.4GW Hollandse Kust (west) Wind Farm Zone in the Netherlands, taking
place in the first half of 2022.

·      Capex progress: Good progress is being made on SSE's £12.5bn
investment and capital expenditure plan. In November, financial close was
reached on Dogger Bank C; and construction continues at Dogger Bank A&B
offshore wind farms as well as Viking onshore wind farm. First power on
Seagreen offshore wind farm is targeted for Q2 of calendar year 2022 and is
expected to commence full commercial operation in January 2023.

·      Flexible generation: SSE sees lower carbon, flexible generation
as vital to a smooth transition to net zero. Commissioning is currently under
way at SSE Thermal's high-efficiency 893MW CCGT plant at Keadby 2 and this
will be followed by a performance validation period before handover in Q4 of
calendar year 2022.  SSE has also partnered with Equinor on two new carbon
capture projects - Keadby 3 and Peterhead - which have been formally submitted
to the UK Government's Cluster Sequencing Process.

·      New leadership: Stephen Wheeler took up his post as Managing
Director, SSE Renewables on 1 January 2022. Stephen has a wealth of experience
in generation and renewables within SSE and he was part of the successful
management team that grew the Airtricity renewable energy platform before SSE
acquired it in 2008. He previously spent over 10 years working with ABB and
Siemens internationally.

Refreshed 2030 Business goals

SSE today announces a refresh of its four core business goals for 2030,
aligned to the UN's Sustainable Development Goals and linked to executive
remuneration. The four goals increase SSE's climate ambition in line with its
NZAP and reflect the extent to which SSE has already delivered against its
previous goals established in 2019. The refreshed goals are to reduce Scope 1
carbon intensity by 80%; build a renewable energy portfolio to generate at
least 50TWh; enable 20TWh of renewable generation, 2m electric vehicles and 1m
heat pumps on its transmission and distribution networks; and finally,
champion a just energy transition throughout. Further details on these goals
can be found on sse.com.

 

Gregor Alexander, Finance Director, said:

"SSE's performance in the year so far gives us renewed confidence about
delivery of good financial results for the full year. When coupled with the
progress made on our capex plans in recent months, it also highlights the
value we are creating for all stakeholders from continued execution of our net
zero-aligned strategy.

 

"The significant bolstering of SSE Renewables' pipeline, the increased
visibility we have over opportunities for greater growth in SSEN Transmission
and the balance provided by SSE Thermal through a turbulent trading period
have demonstrated yet again the value of SSE's integrated business mix and its
capacity for delivering sustainable shareholder returns over the long term.

 

"Today's Trading Statement demonstrates SSE's Net Zero Acceleration Programme
in action and the milestones reached since reporting our interim results move
us closer to delivering the refreshed 2030 goals that will accelerate growth,
drive shareholder returns and play a critical role in keeping global warming
to a 1.5C pathway."

Appendix - Operational performance

SSE RENEWABLES

Electricity output from renewable sources in which SSE has an ownership
interest across the UK and Ireland (excluding pumped storage) was 1.4TWh, or
19%, below plan in the 9 months to 31 December, largely due to the summer
months being exceptionally still and dry across the UK and Ireland. This
shortfall represents 13% of the annual forecast total output.

                                                                    Actual output for 9 months to                        % of planned output  Planned output for 9 months to         31 Dec 2021          Actual output for 9 months to

31 Dec 2021
31 Dec 2020
 Onshore wind generation output - GWh inc. constrained off output   2,791                                                79%                  3,554                                                       3,149
 Offshore wind generation output - GWh inc. constrained off output  1,099                                                83%                  1,323                                                       1,326
 Conventional hydro generation output - GWh                         2,030                                                84%                  2,427                                                       2,571
 Total renewables output (excl. pumped storage) - GWh               5,920                                                81%                  7,304                                                       7,046
 Pumped storage generation output - GWh                             156                                                  -                    -                                                           156
 Total renewables output - GWh                                      6,076                                                -                    7,304                                                       7,202

1. Wind output based on SSE's contractual share and includes 268 GWh of
onshore and 118GWh of offshore compensated constrained off generation in the
nine months to 31 December 2021, and 443GWh of compensated constrained off
onshore generation in the same period in 2020.

SSEN DISTRIBUTION

In late November, 135,000 homes in SSEN's SHEPD licence area in the North of
Scotland were impacted by Storm Arwen. In response to this
once-in-a-generation weather event, SSEN mobilised more than 1,000 employees
who worked through extreme conditions to restore supply to customers. The
storm was treated as an "Exceptional Event" by Ofgem, and as such the related
outages are not reflected below.

                                                          9 months to        9 months to

                                                          31 December 2021   31 December 2020
 Customer minutes lost (SHEPD) - average per customer     41                 38
 Customer minutes lost (SEPD) - average per customer      33                 33
 Customer interruptions (SHEPD) - per 100 customers       39                 45
 Customer interruptions (SEPD) - per 100 customers        33                 35
 Electricity transported through SSEN Distribution - TWh  27                 26

SSE THERMAL

Electricity output from SSE's gas-fired generation plant for the nine months
to 31 December 2021 was around 14% lower than in the same period in 2020,
reflecting plant availability and market conditions. Flexible thermal
generation continues to play a key part in the GB and Irish energy markets as
we transition to net zero, with its role now focused on creating value by
providing vital balancing services to enable a renewables-led system. Its
profitability is therefore less dependent on the volume of its output and
financial performance for the year is expected to be ahead of plan.

                                          9 months to        9 months to

                                          31 December 2021   31 December 2020
 Gas-fired generation output (GB)- GWh    8,670              11,334
 Gas-fired generation output (ROI)- GWh   2,517              1,702
 Total gas-fired generation output - GWh  11,187             13,036

1. Output includes 642GWh of oil-fired generation in the nine months to 31
December 2021 and 242GWh of oil-fired generation in the same period in 2020,
primarily island diesels and older Irish plant.

2. In September 2021 SSE's offtake agreement for 100% of output from its
Seabank CCGT JV expired, with output following that date only recognised to
the extent of its 50% equity share.

3. SSE announced the sale of its stake in Ferrybridge and Skelton Grange
multifuel assets on 13 October 2020, the output of these is not included
above.

 

Notification of Closed Period

SSE expects to issue a Notification of Closed Period statement on 29 March
ahead of publication of its Preliminary Full-year Results for 2021/22 on 25
May 2022.

 

 Enquiries
 Investors  SSE Investor Relations  ir@sse.com (mailto:ir@sse.com)        Sally Fairbairn, Michael Livingston  +44 (0)345 0760 530
 Media      SSE Media               media@sse.com (mailto:media@sse.com)  Sam Peacock,                         +44 (0)345 0760 530

                                                                          Glenn Barber
            MHP Communications                                            Oliver Hughes                        +44 (0)7885 224 532
                                                                          Simon Hockridge                      +44 (0)7709 496 125

 

 

ENDS

 

 

 

 

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