SSE shares were relatively well bid on Wednesday after the power generator announced first-half results and a sharp jump in energy output.
The combination of a 1GW increase in capacity and favourable weather conditions saw SSE’s output surge 45% higher during the period, driving a 24% increase in adjusted operating profit.
Investors may be a little disappointed to learn that CEO Alistair Philips-Davies plans to step down after being instrumental in the group’s transition to a clean energy provider which may be reflected in the muted response in shares on Wednesday.
“SSE’s powering along nicely and should continue thanks to the foundations built by group CEO Alistair Philips-Davies. But after 11 years in the power seat, he’s announced his intention to step down once a successor is found. Turning to business performance, and climate-focused investors will be pleased to hear that renewable energy output rose 45% in the first half,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“The uplift was helped by increased capacity, higher prices and an easy comparative period as last year’s performance was held back by unfavourable weather conditions.”
Chiekrie continued to explain SSE’s drive to increase its renewable power capacity with investment of £1.3bn in new facilities in the first half.
During the period, SSE completed the 443MW Viking wind farm located on the Shetland Islands, facilitating the Shetland’s first connection to the grid. The Viking wind farm will produce enough electricity to power 500,000 homes.
“Efforts to plant itself at the heart of the clean energy transition have continued at pace, with £1.3bn of investment in the first half. Turbo-charging focus on renewables is a bold and admirable move, but the shift comes with a hefty dose of risk – they’re not always reliable,” Chiekrie siad.
“To some degree, they’re always at the mercy of Mother Nature. That’s why more flexible gas-fired plants are still part of the energy mix and can help plug the shortfall in energy output when the wind doesn’t blow in SSE’s favour. These assets were loss-making in the first half, but as consumers fire up the heating over winter months, profits are set to warm up over the second half.”