Profit rises at SSE as renewable transition continues

Energy giant SSE saw profit rise slightly as it continued its transformation away from energy supply and to production of electricity.

The company said that adjusted operating profit rose 1% to just over £1.5 billion, despite a £170 million hit from the Covid-19 pandemic.

The hit was towards the lower end of what SSE had previously guided shareholders to expect.

It comes a little over a year since SSE sold its retail arm to Ovo Energy, getting it out of the business of selling gas and electricity to households.

It is now setting out a future as a renewable energy producer, and plans to reach a run rate of adding one gigawatt of new production a year in the second half of the 2020s.

Bosses said they expect to exceed the target of trebling renewable output by 2030.

They pointed towards international wind power, carbon capture and storage, and hydrogen as some of the areas that the company could grow.

“Looking ahead, a strong balance sheet, underpinned by world-class assets, gives us a firm footing from which to capitalise on the considerable future growth opportunities we are creating in the transition to net zero,” said chairman Sir John Manzoni.

He added: “We have also made significant progress on our non-core disposals programme, creating value for shareholders while continuing to sharpen the group’s strategic focus on its low-carbon electricity core in networks and renewables, where our capital investment programme is progressing well.”

Hargreaves Lansdown analyst William Ryder said that SSE is still reliant on its legacy businesses to help fund the transition and continue to pay a dividend, which rose slightly to 81p per share.

“SSE is continuing its drive to become a renewable energy giant, and combining electricity distribution networks with renewable generation continues to look like a shrewd strategy,” Mr Ryder said.

“At the moment the group is investing heavily, and continual portfolio shuffling obscures some underlying trends, but the group looks to be at the forefront of an important trend towards renewables.

“If execution continues to be up to standard, a very attractive utility could emerge in the years ahead.”