Renewables output came in below plan over the nine months to December 31 with SSE citing “exceptionally still and dry weather”, adding that the shortfall also reflected “short-term plan outages and re-phasing of flexible hydro output into the fourth quarter”. The UK was battered by 10 named storms in the third quarter, two of which SSE said were classified as exceptional events.
The company noted that SSE Distribution had restored power to 99% of customers within 48 hours during Storm Gerrit in December, despite 90mph winds impacting the north of Scotland, while in January supplies were restored to customers in the south of England within two days during Storm Henk.
Output from the company’s thermal division, meanwhile, was 24% lower over the nine months to December 31. SSE said this reflected lower spark spreads and an increase in planned and unplanned outages, which were offset by additional capacity from Keadby 2 in Scunthorpe, and the acquisition of Triton Power in East Yorkshire.
Despite the challenges, SSE declared that is was on track to report previously announced adjusted earnings per share guidance of more than 150p, though it said the earnings outrun depended on factors such as plant availability, supportive market conditions, and normal weather across the remainder of the fourth quarter.
It also highlighted what it described as continued improvement in the long-term policy and regulatory environment underpinning its net zero focused strategy.
Developments have included significant increases in the administrative strike price for allocation round six of the contracts for difference scheme, which should aid its recently consented Cloiche onshore wind farm in the Highlands, and the Berwick Bank offshore project in the North Sea, should planning permission should be received.
SSE also highlighted the development of routes to market for carbon capture and storage, hydrogen, and long-duration energy projects, noting that a government consultation response had confirmed ministers are minded to introduce a cap and floor revenue stabilisation mechanism.
John Moore, senior investment manager at RBC Brewin Dolphin, said: “Unfavourable weather has had a negative impact on SSE, showing it is not all plain sailing for the renewables sector even as the policy environment improves. Despite this, the company remains on target to meet its previous guidance for the year, with the transition to a rebased dividend that is part of its plans for shareholder returns combined with significant capex investment.
“SSE’s shares are down -10% in the year to date, but it has strong prospects and a good amount of momentum, putting the company in a strong position – even if inclement weather conditions cause a blip in performance in the short term.”
SSE chief financial officer Barry O’Regan 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 (net zero acceleration programme) 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.”
Shares in SSE closed down 4.69%, or 77.5p, at 1,575p.