SSE has rebuffed calls to break itself up, and announced a multi-billion pound plan to boost investment across its renewable energy and electricity networks businesses.
The FTSE 100 energy supplier will expand its investment plan for the next five years to £12.5bn, from its previous target of £7.5bn, in areas which will help the UK reach its net zero climate targets.
By the end of the decade SSE plans to run a quarter of the UK’s offshore windfarms, alongside its electricity grid networks in the north of Scotland and parts of England, and its planned fleet of flexible “low carbon” power plants.
Forty per cent of the extra £1bn of green investments every year to 2026 will go to its renewable energy business, 40% to its networks business, while the remaining 20% will be for the rest of the SSE business.
The spending spree strengthens the company’s existing strategy in defiance of calls by Elliott Management, a major activist hedge fund, to break up the company by splitting off its renewables business.
SSE said it had “carefully considered a wide range of available strategic options”, including the separation of its renewables division, but had concluded it would “not be the best route for growth, execution and value creation and was not therefore in the long-term interests of its stakeholders”.
However, SSE’s share price plunged by 5% after the firm set out its plans, which include a surprise dividend cut of about 30% from the 2023-24 financial year to 60p a share, alongside plans to sell off a quarter of its electricity networks businesses.
The Perthshire-based energy group, which sold off its energy supply business to Ovo Energy shortly before Covid-19 pandemic, reported a doubling of profits for the first half of the year compared with the year before despite a slowdown in wind speeds, which dented its renewable energy generation.
On a pre-tax basis SSE’s half-year profits grew by 116% to £1.69bn.
The slowdown in wind speeds earlier this year, which has cut revenues for many major renewable energy companies, was “more than offset” by higher revenues in SSE’s networks businesses with a further boost from other energy assets such as gas storage.