SSE unveils £12.5bn net zero acceleration programme

Energy firm SSE is to make a £12.5 billion capital investment plan to accelerate its progress towards net zero.

SSE unveils £12.5bn net zero acceleration programme

The company said the move, a capital investment increase of two thirds (£1bn more annually), will see it become the biggest global constructor of offshore wind farms.

The new programme will see SSE enable the delivery of over a quarter of the UK’s 40GW offshore wind target by 2030 and over 20% of the necessary upcoming electricity networks investment in the UK, as well as continuing its international expansion.

Alistair Phillips-Davies, SSE chief executive, said: “After all the commitments made at COP26, now is the time to deliver. Our Net Zero Acceleration Programme represents the next phase of SSE’s growth and involves a substantial ramping up of investment – equivalent to nearly £7m each day in low-carbon infrastructure – backed up by clear delivery and funding plans.

“Today’s announcement will maximise our long-term potential and capture growth opportunities during a critical time for the energy sector, creating jobs, delivering on government ambitions, and creating value for society and shareholders.”

SSE’s Net Zero Acceleration Programme will deliver, by 2026:

  • £1bn additional capital investment per year versus previous plans
  • A doubling of existing renewables net installed capacity to 8GW
  • A sustainable renewables development pipeline in excess of 15GW
  • Over 2.5 times more capital allocated to renewables growth
  • Growth in electricity networks, increasing Regulated Asset Value (RAV) to £9bn

The programme will be supported by further partnering in renewables and up to 25% minority stake sales in SSEN Transmission and SSEN Distribution. With electricity demand set to more than double in the transition to net zero, SSE sees significant growth potential in these core networks businesses and selling minority stakes will enable it to unlock this growth to the fullest whilst maintaining an attractive balance of capital allocation across the group.

SSE has also set out today a new, growth-enabling dividend plan from 2023/24, paying at least £3.50 per share across the five years. Correspondingly, after fulfilment of existing commitments to 2023, SSE will rebase its dividend to 60 pence in 23/24, before targeting at least 5% dividend increases in 24/25 and 25/26.

Looking further ahead, SSE has set out a series of ambitious targets for the next decade to 2031. These include delivering a fivefold increase in renewables output, increasing renewable and other low-carbon generation capacity to more than 16GW, including new flexible technologies such as carbon capture and storage, hydrogen and batteries.

SSE has also confirmed revised greenhouse gas emission targets aligned with a 1.5°C pathway, backed by the Science Based Target Initiative. Its new targets for scope 1 and 2 absolute emissions cut in half the previously planned emissions for 2030.

Sir John Manzoni, chair of SSE plc, added: “Over the past six months the board of directors has carefully considered a range of strategic alternatives for the next phase of SSE’s growth and development. Having reviewed all options and taken independent advice this resulting strategic update significantly accelerates growth in our core businesses, whilst providing efficient and competitive sources of financing and ensuring SSE continues as a reliable and resilient operator of critical infrastructure.

“The board believes these plans represent the optimal pathway for SSE, positioning it as the UK’s clean energy champion with the scale to enable the delivery of over 25% of the UK’s 40GW offshore wind target and over 20% of upcoming UK electricity networks investment, deploy flexibility solutions to keep the lights on, whilst exporting its renewables capabilities overseas. SSE is creating long-term value for all of our stakeholders.”

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