Scottish energy giant raises earnings forecast despite renewables output being hit by lack of wind

ENERGY giant SSE has raised its earnings forecast for the year as it reported a significant fall in output from its renewables division was offset by a strong performance by its gas-fired and hydro assets.

SSE, which is investing huge amounts to ramp up its renewable energy generation, said the “exceptionally still and dry” weather conditions in the UK and Ireland meant electricity output from renewable sources was 19 per cent below plan in the nine months to December 31. Total renewables output, excluding from pumped storage, for the period was 5,920 gigawatt-hours, compared with 7,304 GWh as planned. Actual output was 7,046 GWh for the nine months to December 31, 2020.

SSE reported that electricity from its gas-fired generation plant was around 14% lower than planned for the nine months to December 31, “reflecting plant availability and market conditions”. But it said the performance of its thermal operation is expected to be ahead of plan, noting that the role of the division is now on “creating value by providing vital balancing services to enable a renewables-led system”.

Total gas-fired generation was 11,187 GWh for the nine months to December 31, 2021, compared with 13,036 GWh over the same period in 2020.

SSE upgraded its expectations for full-year adjusted earnings per share to at least 90p from at least 83p. The company said it intends to recommend a full-year dividend of 81p per share plus RPI for 2021/22 and continues to target an RPI-linked dividend in 2022/23.

Finance director Gregor Alexander said: “SSE’s performance in the year so far gives us renewed confidence about delivery of good financial results for the full year. When coupled with the progress made on our capex plans in recent months, it also highlights the value we are creating for all stakeholders from continued execution of our net zero-aligned strategy.”

The company, which has faced calls to be broken up by activist investor Elliott Management, is currently commissioning an 840 mega-watt Keadby 2 gas-fired power plant in North Lincolnshire.

On the renewables front, SSE recently achieved success in the ScotWind licensing round, having secured its preferred site following its bid with joint venture partners Marubeni and Copenhagen Infrastructure Partners. The site will have the capacity to produce at least 2.6 gigawatts of electricity from the proposed offshore facility, which would lift its current secured pipeline to around 11GW.

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