energy

SSE trumpets investment plans in face of UK windfall tax threat


SSE has insisted it will invest “significantly more” in expanding Britain’s energy infrastructure in the next few years than it earns in profit as electricity generators look to stave off the threat of a potential windfall tax.

The Scottish energy group said on Wednesday it could invest more than £24bn in Britain by the end of 2030 to help the country achieve its clean energy ambitions.

Its comments came as it reported a 44 per cent rise in full-year pre-tax profit to £3.5bn, including one-off credits after the group decided to reverse “significant historical impairments” booked in previous years as it benefits from market volatility. Stripping out such exceptional items, SSE’s adjusted operating profit improved 15 per cent to £1.5bn.

Its £24bn investment goal is up from a previous target of £12.5bn by 2026.

Shares in SSE fell heavily this week after the Financial Times revealed that UK chancellor Rishi Sunak had ordered officials to draw up plans for a windfall tax on electricity generation companies such as SSE, EDF Energy, ScottishPower and Centrica, as well as North Sea oil and gas producers.

Household energy bills have jumped to an average £2,000 a year and are expected to rise to £2,800 in October, leading the government to consider a windfall tax on those benefiting from the crisis to pay for help for consumers.

Government officials believe electricity generators have made £10bn in “excess” profits from high wholesale power prices in the past year, although that figure has been contested by analysts.

SSE chief executive Alistair Phillips-Davies said it was impossible to speculate on the impact of a windfall tax for investors but insisted the group was investing “far more” than it was making in profit to deliver “clean, homegrown energy” that would “bolster security, cut emissions and make energy more affordable over the long term”.

Shares in the company were up almost 5 per cent in mid-afternoon trading on expectations of even bigger profits this year and after Kwasi Kwarteng, business and energy secretary, appeared to dispel fears that the windfall tax would spread to the electricity generators.

“This is a significant investment from SSE and a huge vote of confidence in our energy security plans. SSE will help make our energy cleaner and cheaper, while supporting high quality, green jobs right across the UK,” Kwarteng said.

SSE, which is based in Perth, said it expected to deliver adjusted earnings per share in its new financial year “of at least 120p”, up from 95.4p in 2022.

Bernstein analyst Deepa Venkateswaran said the 2023 guidance was about 9 per cent higher than the market’s expectations.

SSE’s board plans to recommend a final dividend of 60.2p per share, taking the full-year dividend to 85.7p, up from 81p the previous year.

The improvement in profits was driven by the benefit from high wholesale prices to SSE’s hydro plants and gas-fired power stations, which help to meet demand when renewable assets such as wind and solar are not generating. The company previously upgraded its profit guidance in March because of soaring wholesale power prices.



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