Wed. May 25th, 2022

SSE has upgraded its full-year earnings projection after the energy group’s gas and hydro plants benefited from soaring power prices since Russia invaded Ukraine.

The FTSE 100 company, which also runs a regional electricity distribution network, said on Tuesday it expected adjusted earnings per share to range of 92p-97p, compared with guidance last month of at least 90p.

Russia’s invasion has sent electricity prices to record highs, while owners of steady sources of energy such as gas have benefited as they helped balance the electricity grid during several periods of low winds. More recently, SSE benefited from a revival of renewable energy – including wind farms and hydro generation – as a result of more suitable weather conditions.

“The war has had significant consequences for energy markets and policy, contributing to historically high and volatile prices, ”the company said in a statement. “SSE has so far been served well by its prudent hedging approach and has successfully managed any increasing credit and collateral requirements.”

SSE is also one of five regional electricity distribution monopolies, serving 3.8mn customers in northern Scotland and southern England.

The group, formerly known as Scottish and Southern Energy, has in the past few years undergone a strategic shift away from fossil fuels to focus on renewables and regulated regional electricity networks. In 2020 it offloaded its household energy supply business to Ovo Energy and sold its North Sea gasfields.

It intends to invest around £ 2bn this year in low-carbon electricity projects, including building the world’s largest offshore wind farm at Dogger Bank off England’s east coast, and upgrading onshore power networks to connect new projects.

Other plans include developing new gas-fired power plants incorporating carbon capture and storage technology, and a proposal for the world’s first large scale hydrogen burning power plant. SSE is also looking to expand into building offshore wind farms overseas.

The company this month completed the £ 1.28mn sale of its 33.3 per cent stake in regional gas distribution operator Scotia Gas Networks to a consortium including Ontario Teachers’ Pension Plan Board and Brookfield Super-Core Infrastructure Partners.

The sale comes amid a wave of international transactions in the energy sector. National Grid on Sunday sold a 60 per cent stake in its UK gas transmission business to a consortium of investors in Australia and North America, led by Australian bank Macquarie.

Danish energy company Ørsted on Monday sold a 50 per cent stake in its proposed Hornsea 2 wind farm development to French bank Crédit Agricole and insurer Axa in a £ 3bn deal.

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