SSE in £1.8bn capital spend as profits fall

Alistair Phillips-Davies, CEO of SSE

Perth-based energy giant SSE said its adjusted profit before tax fell 13.3% to £475.8 million in the six months to September 30 compared to the same period in 2015.

It said the reduction reflected lower profits in its wholesale and retail businesses due to weather, lower customer numbers and essential energy infrastructure upgrades such as smart meter roll-out costs.

SSE said it expects a return to growth for the current financial year.

SSE announced it plans to invest a record £1.85 billion of capital expenditure in Great Britain and Ireland in 2016 and 2017 as it continues to develop “secure, sustainable and low carbon energy infrastructure for the future.”

The company also confirmed it plans to use the proceeds from the sale of part of its stake in gas distribution company SGN to return value to shareholders “with an on-market share buy-back of around £500 million, with around £100 million to support investment in a new onshore windfarm at Stronelairg, near Fort Augustus.”

SSE chief executive Alistair Phillips-Davies said: “We are a company that invests and operates our businesses for the long-term and that’s why today we’ve announced plans for our largest ever investment in the UK this year — a record £1.85 billion.

“From building the clean, lower carbon generation we need for the future, the new and upgraded wires to transport energy around the country, and new, improved service for energy supply customers, SSE is investing in customers, in jobs, in the business supply chain and in Great Britain and Ireland’s economies at a critical time.”

SSE said two of the biggest ever private investments in Scotland are currently under construction:

  • the 588MW 84 turbine Beatrice Offshore Wind Farm, which will power more than 450,000 homes and in which SSE has a 40% stake
  • the new Caithness-Moray transmission link, which will strengthen the electricity grid in the North of Scotland

SSE is also building the largest wind farm in Ireland, Galway Wind Park, and will be installing smart meters into millions of customer homes through to 2020.

The company said its total investment and capital expenditure through to 2020 is expected to be almost £6 billion.