REG - SSE Plc - Q3 Trading Statement

SSEAnnouncement

08/02/2024 07:15

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RNS Number : 4098C  SSE PLC  08 February 2024

SSE plc

q3 trading statement

8 FEBRUARY 2024

 

·    Reaffirming FY24 adjusted earnings per share guidance of more than
150p.

·    Focus on delivery throughout challenging weather and operational
conditions which saw ten named storms, with lower-than-planned renewables
output over the quarter.

·    Positive UK Government policy announcements further underlining the
strength of the Group's high-quality networks, renewables and flexibility
project pipeline.

 

This Trading Statement sets out SSE's financial outlook, outlines operational
performance for the third quarter ending 31 December 2023, and updates on
strategic delivery of the Net Zero Acceleration Programme ("NZAP") Plus.

 

TRADING UPDATE

SSE reaffirms FY24 adjusted earnings per share guidance of more than 150
pence, noting a narrower range of probable financial outcomes for the
full-year following lower than planned renewables output over the quarter.

SSE Renewables output over the first three quarters was around 15% below plan,
or 10% below plan relative to full year, having been impacted by a combination
of mixed weather conditions, short-term plant outages and rephasing of
flexible hydro output into the fourth quarter. January has seen continued
mixed weather conditions for the renewables fleet.

In SSE Thermal, performance continues to reflect lower spark spreads and
market volatility when compared to the same period last year. However, the
business is still expected to deliver its guidance of more than £750m
adjusted operating profit, including more than £75m from Gas Storage, for
FY24.

The Group's final full-year earnings outturn remains subject to factors such
as plant availability, supportive market conditions and normal weather across
the remainder of the fourth quarter. SSE will provide an update on performance
for the final months of the year in its Notification of Closed Period
statement.

The Group remains on course to deliver adjusted investment and capital
expenditure of around £2.5bn in FY24.

OPERATIONAL and Strategic DELIVERY

Progress continues with the delivery of SSE's £20.5bn NZAP Plus investment
plan despite operational challenges during the quarter.

Delivery of the SSEN Transmission investment programme continues to make good
progress.  Enabling work is now under way on the Eastern Green Link 2, the
HVDC link from Peterhead to Yorkshire. SSEN Transmission also successfully
issued a £500m 20-year green bond at a fixed coupon of 5.5%, which will be
used to help finance critical national infrastructure projects.

Good progress has been made by SSE Renewables at Viking in Shetland and at
Yellow River in Ireland, where the first turbine has now been installed, as
well as installation of the HVDC transmission system, cabling and foundations
at Dogger Bank A.

However, turbine installation on Dogger Bank A has been affected by
challenging weather conditions with vessel availability and supply chain
delays further impacting progress. Following notification of further vessel
unavailability over the coming weeks there is an increasing possibility that
full operations will not be achieved until 2025, although this is not expected
to materially change project returns. The business is working closely with its
supply chain partners to improve current turbine installation rates, with a
further update on progress to be provided in May with publication of FY24
Results.

In SSEN Distribution, the business demonstrated its operational effectiveness
through ten named storms, two of which were classified as exceptional events.
In December, power was restored to 99% of customers within 48 hours during
Storm Gerrit, despite 90mph winds impacting the North of Scotland. In January,
Storm Henk impacted 60,000 customers in the South of England, with the teams
outperforming estimates to restore all supplies within 48 hours.

AN INCREASINGLY SUPPORTIVE POLICY ENVIRONMENT

The quarter saw continued improvement in the long-term policy and regulatory
environment underpinning SSE's net zero-focused strategy and the benefits of
the Group's high-quality pipeline across networks, renewables and flexibility.
This included:

-     Publication by Ofgem of its Sector Specific Methodology Consultation
for the RIIO-3 framework which has the potential to integrate the ASTI success
into a progressive price control framework;

-     Significant increases to the Administrative Strike Price for
Allocation Round 6 of the Contracts for Difference framework, where SSE has
potential projects including its recently consented Cloiche onshore wind farm
as well as Berwick Bank should timely planning consent be received; and

-     Progress in developing the routes to market for CCS, hydrogen and,
in particular, long duration energy storage projects, where a long-awaited
government consultation response confirmed it is minded to introduce a cap and
floor revenue stabilisation mechanism.

Barry O'Regan, Chief Financial Officer, said:

"Whilst the quarter has seen the business navigate some short-term challenges,
we reiterate and continue to focus on the delivery of our 2027 financial and
operational growth targets established in the NZAP Plus.

"The strength of our balanced business mix and the growth opportunity it
provides is aligned with a policy environment which increasingly recognises
the essential role renewables, electricity networks and flexible power will
play in the energy system of the future. Our long-term strategy remains
unchanged and will deliver sustainable value for shareholders and society."

operational PERFORMANCE

SSE Renewables

SSE Renewables output was 1.3TWh or around 15% behind plan for the nine months
to 31 December 2023, largely due to exceptionally still and dry weather
conditions but also reflecting short-term plant outages and rephasing of
flexible hydro output into the fourth quarter. This represents a 10% shortfall
relative to planned output for the full year.

 

                                                  Output for 9 months to                        % of planned output  Plan for 9 months to                        Output for 9 months to

31 Dec 2023
31 Dec 2023
31 Dec 2022
 Onshore wind - GWh                               3,109                                         87                   3,574                                       3,458
 Offshore wind - GWh                              2,056                                         82                   2,495                                       1,328
 Conventional hydro - GWh                         1,947                                         83                   2,341                                       2,074
 Total SSE Renewables (ex. pumped storage) - GWh  7,112                                         85                   8,410                                       6,860
 Pumped storage - GWh                             224                                           -                    -                                           205
 Total SSE Renewables - GWh                       7,336                                         -                    -                                           7,065

Note: Output based on equity share and in the nine months to 31 Dec 2023
includes 418GWh of onshore and 382GWh of offshore compensated constrained off
generation. The same period in 2022 includes 341GWh of onshore, and 97GWh of
offshore, compensated constrained off generation.

 

SSE Thermal
Output of electricity from SSE's gas-fired generation plant for the nine
months to 31 December 2023 was 24% down on the same period last year. This
reflects lower spark spreads and an increase in planned and unplanned outages
which have been partially offset by additional capacity from Keadby 2 and the
Triton Power acquisition.

                                          9 months to   9 months to

                                          31 Dec 2023   31 Dec 2022
 Gas-fired generation output (GB) - GWh   9,563         13,232
 Gas-fired generation output (ROI) - GWh  1,234         1,018
 Total gas-fired generation output - GWh  10,797        14,250

Notes: Output is based on equity share except Marchwood where 100% of volumes
are included due to the contractual arrangement. Output includes 86GWh of
oil-fired generation in the nine months to 31 Dec 2023 and 311GWh in the same
period in 2022. GB output in 2022 excludes 649GWh of pre-commissioning output
from Keadby 2 CCGT which commissioned in March 2023.

 

Flexible thermal generation creates value by providing vital balancing
services which underpin a renewables-led system, and its outturn profitability
is therefore less dependent on the volume of output.

 

Notification of CLoseD Period

SSE expects to issue a Notification of Closed Period statement towards the end
of March 2024 ahead of publication of its Preliminary Full-year Results for
FY24 on 22 May 2024.

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

                                                                          Raymond Buchanan

            MHP Group                                                     Oliver Hughes       +44 (0)7885 224 532

                                                                          James McFarlane     +44 (0)7584 142 665

 

 

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