SSE
plc
q3
trading statement
8 FEBRUARY
2024
·
Reaffirming FY24
adjusted earnings per share guidance of more than
150p.
·
Focus on delivery
throughout challenging weather and operational conditions which saw
ten named storms, with lower-than-planned renewables output over
the quarter.
·
Positive UK
Government policy announcements further underlining the strength of
the Group's high-quality networks, renewables and flexibility
project pipeline.
This Trading Statement sets out
SSE's financial outlook, outlines operational performance for the
third quarter ending 31 December 2023, and updates on strategic
delivery of the Net Zero Acceleration Programme ("NZAP")
Plus.
TRADING UPDATE
SSE reaffirms FY24 adjusted earnings per share
guidance of more than 150 pence, noting a narrower range of
probable financial outcomes for the full-year following lower than
planned renewables output over the quarter.
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. 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.
OPERATIONAL and Strategic DELIVERY
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.
AN
INCREASINGLY SUPPORTIVE POLICY ENVIRONMENT
The quarter saw continued improvement in the
long-term policy and regulatory environment underpinning SSE's net
zero-focused strategy and the benefits of the Group's high-quality
pipeline across networks, renewables and flexibility. This
included:
-
Publication by Ofgem of its Sector Specific Methodology
Consultation for the RIIO-3 framework which has the potential to
integrate the ASTI success into a progressive price control
framework;
-
Significant increases to the Administrative Strike Price for
Allocation Round 6 of the Contracts for Difference framework, where
SSE has potential projects including its recently consented Cloiche
onshore wind farm as well as Berwick Bank should timely planning
consent be received; and
- Progress
in developing the routes to market for CCS, hydrogen and, in
particular, long duration energy storage projects, where a
long-awaited government consultation response confirmed it is
minded to introduce a cap and floor revenue stabilisation
mechanism.
Barry O'Regan,
Chief Financial Officer, 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."
operational PERFORMANCE
SSE
Renewables
SSE Renewables output was 1.3TWh or
around 15% behind plan for the nine months to 31 December 2023,
largely due to exceptionally still and dry weather conditions but
also reflecting short-term plant outages and rephasing of flexible
hydro output into the fourth quarter. This represents a 10%
shortfall relative to planned output for the full year.
|
Output for 9 months
to
31 Dec 2023
|
% of planned output
|
Plan for 9 months
to
31 Dec 2023
|
Output for 9 months
to
31 Dec 2022
|
Onshore wind - GWh
|
3,109
|
87
|
3,574
|
3,458
|
Offshore wind - GWh
|
2,056
|
82
|
2,495
|
1,328
|
Conventional hydro - GWh
|
1,947
|
83
|
2,341
|
2,074
|
Total SSE Renewables
(ex. pumped storage) - GWh
|
7,112
|
85
|
8,410
|
6,860
|
Pumped storage - GWh
|
224
|
-
|
-
|
205
|
Total SSE Renewables
- GWh
|
7,336
|
-
|
-
|
7,065
|
Note: Output based on equity share
and in the nine months to 31 Dec 2023 includes 418GWh of onshore
and 382GWh of offshore compensated constrained off generation. The
same period in 2022 includes 341GWh of onshore, and 97GWh of
offshore, compensated constrained off generation.
SSE
Thermal
Output of electricity from SSE's gas-fired
generation plant for the nine months to 31 December 2023 was 24%
down on the same period last year. This reflects lower spark
spreads and an increase in planned and unplanned outages which have
been partially offset by additional capacity from Keadby 2 and the
Triton Power acquisition.
|
9 months to
31 Dec 2023
|
9 months to
31 Dec 2022
|
Gas-fired generation output (GB) - GWh
|
9,563
|
13,232
|
Gas-fired generation output (ROI) - GWh
|
1,234
|
1,018
|
Total gas-fired
generation output - GWh
|
10,797
|
14,250
|
Notes: Output is based on equity
share except Marchwood where 100% of volumes are included due to
the contractual arrangement. Output includes 86GWh of oil-fired
generation in the nine months to 31 Dec 2023 and 311GWh in the same
period in 2022. GB output in 2022 excludes 649GWh of
pre-commissioning output from Keadby 2 CCGT which commissioned in
March 2023.
Flexible thermal generation creates value by providing
vital balancing services which underpin a renewables-led system,
and its outturn profitability is therefore less dependent on the
volume of output.
Notification of CLoseD Period
SSE expects to issue a Notification of Closed Period
statement towards the end of March 2024 ahead of publication of its
Preliminary Full-year Results for FY24 on 22 May 2024.
Enquiries
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Investors
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SSE Investor
Relations
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ir@sse.com
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Michael Livingston
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+44 (0)345 0760 530
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Media
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SSE Media
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media@sse.com
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Glenn Barber,
Raymond Buchanan
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+44 (0)345 0760 530
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MHP Group
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Oliver Hughes
James McFarlane
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+44 (0)7885 224 532
+44 (0)7584 142 665
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