SSE Cuts Renewable Goals, Spending in Blow to UK 2030 Target

Power transmission lines. Photographer: Matthew Lloyd/Bloomberg Photo by Matthew Lloyd /Bloomberg

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(Bloomberg) — SSE Plc cut its five-year spending plan by £3 billion ($4 billion) and rowed back plans for renewables growth as planning delays stymie projects.

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The investment program now totals about £17.5 billion, the UK utility said Wednesday. The company booked a multimillion-pound impairment on clean-energy projects in southern Europe, reflecting a build-out that’s slower than planned because of sector-wide holdups to permitting and grid connections.

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“The changing macroeconomic environment and wider delays to planning processes mean the group has reduced its near-term capital investment expectations,” SSE said in a statement. It will be focusing on “controllable costs and efficiencies.”

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Renewable developers across Europe have faced rising costs for financing and long connection queues as networks struggle to keep pace with the expansion of the industry. The stakes are high in the UK, where the government has promised a clean grid by 2030, betting growth in renewables will push energy bills lower.

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SSE said Wednesday it will deliver about 7 gigawatts of installed renewables capacity by 2027. That’s down 2 gigawatts from a previous forecast. The company said it’s unlikely to meet a goal of 50 terawatt-hours of renewable output by the end of the decade, citing delays at projects including the Berwick Bank wind farm and the Coire Glas hydro development.

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SSE also reported full-year financial results in line with estimates, and forecast an increase in earnings per share to as much as 200 pence in the next fiscal year.

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The shares rose as much as 1.9%, and traded up 1.3% as of 9 a.m. in London.

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Capex Cut

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The cut in spending is spread across different business lines, with £1.5 billion less for renewables.

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“The reduction in capex program, with its further orientation towards regulated grids, should be taken positively as it would ease any market’s concerns about SSE’s balance sheet,” Ahmed Farman, an analyst at Jefferies, wrote in a note.

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About 90% of SSE’s investment plan through March 2027 is currently committed, with the remainder subject to delay or potentially even cancellation if the right investment conditions don’t emerge, the company said.

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(Updates with shares in seventh paragraph, analyst comment in ninth.)

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