SSE Renewables output hurt amid Dogger Bank delay

SSE plc, the Perth-based electricity infrastructure giant, said on Thursday that SSE Renewables’ output over the first three quarters of the year was around 15% below plan and that turbine installation on its massive Dogger Bank A development “has been affected by challenging weather conditions.” 

In a trading statement for the third quarter ending December 31, 2023, SSE reaffirmed FY24 adjusted earnings per share guidance of more than 150p “noting a narrower range of probable financial outcomes for the full-year following lower than planned renewables output over the quarter.”

Shares in SSE, the biggest listed company run from Scotland, fell about 2.5% to around £16.13 to give the group a stock market value of about £17.6 billion. SSE shares are down about 12% in 2024 but up 37% for the past five years.

“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,” said the Perth company.

“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.”

On its “operational and strategic delivery” SSE said: “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.”

SSE chief financial officer Barry O’Regan 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.”