SSE cuts investment and warns it won’t meet 2030 net zero goal
SSE, one of the UK’s biggest energy companies has said it is unlikely to meet its 2030 renewable goal in the latest blow to the government’s net zero plans.
SSE said it decided to cut capital investment by as much as £3bn over the next five years, citing macroeconomic uncertainty and planning obstacles.
The Perth-based firm said the move meant it was now set to fall short of its target of having 50 terawatt-hours of renewable generation output by 2030.
“SSE Renewables has seen a significant growth in installed capacity and output over the last few years, however the changing macroeconomic environment and wider delays to planning processes mean the group has reduced its near-term capital investment expectations,” the firm said.
“As a result, it is unlikely to meet its ambitious goal.”
Net zero challenges
SSE’s move comes just days after Denmark-based Orsted abruptly pulled the plug on plans to build the 2.4GW Hornsea wind farm, which was set to be one of the UK’s biggest, citing overwhelming cost pressures.
It follows a decision earlier this month by energy firm Drax that it would pause a major expansion of its Scottish hydro-power plant, while FTSE 100 giant ABF said it would mothball a bioethanol plant in Yorkshire, accusing the government of “undermining” it, in signs energy secretary Ed Miliband’s bold net zero plans were unravelling.
Shadow Energy Secretary Andrew Bowie previously said the Hornsea project’s discontinuation “took the Ed Miliband – already mad – target of getting to clean power 2030, and left it in tatters.
“There is absolutely no way that without Hornsea they can make clean power 2030… Ed Miliband needs to revisit whether or not clean power 2030 is still realistic,” Bowie told City PM.
Bowie said Ørsted’s decision “raised questions” over whether the contracts for difference process, a scheme set up by the previous government to fund renewable energy infrastructure, was “fit for purpose.”
SSE hikes dividend
SSE posted a 26 per cent pre-tax profit slump to £2bn in the year to end March, while net debt rose 17 per cent to £9.5bn over the period.
Despite the decline in profits and capital expenditure cut, SSE said it was able to increase its full-year dividend to shareholders by 7 per cent to 64.2p.
During the year the company completed its 443 megawatt Viking wind farm and associated high voltage cabling, representing an investment of over £1bn.
The firm added it was continuing to progress its 3.6 gigawatt Dogger Bank offshore wind farm with the first phase set to be completed in the second half of 2025.
CEO Alistair Phillips-Davies said: “We have met our financial goals for the year and evolved our investment plans to reflect the changing world around us – leaning into the opportunities presented in networks and redoubling our capital discipline across our energy businesses.”
SSE said its new capex plan would see the company spend £17.5bn over the five years to 2027.