SSE has revealed it could spend more than £25bn in the UK’s energy sector, as it looks to head off the looming threat of a windfall tax.
The energy giant has pledged to spend “significantly more” than they are making in profits developing energy infrastructure to boost the country’s transition to renewables and green energy.
However, it implied the investment was dependent on a favourable tax situation.
In a statement, the company said: “Assuming a continued supportive policy environment, our investment in the UK and Ireland could total in excess of £25bn this decade contributing towards tackling climate change whilst providing indigenous energy supplies and creating high quality low-carbon jobs.”
The £25bn-plus investment goal is more than double its previously announced investment ambition of £12.5bn by 2026.
That said, the firm failed to specify how the funds would be spent, although it argued government plans to ramp up offshore wind capacity to 50GW by the end of the decade represented a “clear” opportunity.
Progress continues on its flagship SSE Renewables projects, with 2.4GW under construction, alongside 1GW of pipeline additions through ScotWind.
Up to to 4.9GW in future additions through Southern Europe acquisitions is expected to complete by September 2022.
The energy giant’s investment commitments were included in its freshly published test full-year results, where SSE unveiled a 15 per cent boost in profits and a 23 per cent rise in earnings per share, driven by record investment and its extensive portfolio of assets.
Profits spiked to £1.54bn, up from £1.33bn while earnings per share climbed to 95.4p from 78.4p last year.
Its strong performance was powered by spiralling energy prices for energy from its hydrogen and gas power plants, alongside its continued portfolio expansion.
The collective value of investment, capital and acquisitions soaring from £912m to a record £2.07bn.
Renewables could be included in government levy
SSE is owned by OVO Energy, and is collectively home to around five million customers.
Shares in SSE dropped 11 per cent yesterday, following media reports Chancellor Rishi Sunak was leaning towards a windfall tax to ease household energy bills.
The Labour Party has been persistently demanding a one-off levy on North Sea oil and gas operators to reduce the cost of energy for consumers.
Ofgem has warned the price cap will likely spike to £2,800 per year in October, piling more pressure on households that are also facing soaring food and fuel prices.
Sunak has asked official to draw up plans for a levy on all electricity generation companies, not just oil and gas operators, according to the Financial Times.
This would also affect renewable operators such as SSE, alongside EDF Energy, Octopus Energy, ScottishPower and Centrica, alongside fossil fuel traders such as BP and Shell.
Government officials believe electricity generators have made £10bn in “excess” profits from high wholesale power prices in the last year, although that figure remains disputed.
Alistair Phillips-Davies, SSE chief executive, said: “Strategically, operationally and financially, SSE is well-placed to continue to create value for all of our stakeholders and wider society as we create the infrastructure needed to deliver net zero, secure energy supplies and ultimately drive consumer prices down.”
However, Edison Group’s director of research Neil Shah offered a gloomier outlook, suggesting energy firms will remain under pressure as governments scramble to reduce living costs for voters.
He said: “With Ofgem predicting energy bills to rise £800 by October this year, it is unclear whether the chancellor will be as receptive to the arguments made by energy companies as he has been in the past. Amidst both macroeconomic uncertainty and this potential legislative scrutiny, SSE faces a difficult year ahead”.