SSE plc (LON:SSE) plans to consolidate the development, operation and ownership of its renewable energy assets in the UK and Ireland under a single entity to be known as SSE Renewables.
The creation of SSE Renewables is a step towards SSE’s vision of being a leading energy company in a low carbon world and is in line with SSE’s commitment, set out in its Business Update in May 2018, to take forward a new business model that gives:
· greater focus on core businesses including renewables;
· investors greater visibility of assets and earnings;
· each of its businesses the best platform for future success.
SSE Renewables will comprise SSE’s existing operational assets, and assets under development and construction in the UK and Ireland in:
· onshore wind;
· offshore wind;
· flexible hydro electricity;
· run-of-river hydro electricity; and
· pumped storage
The group’s operational assets are currently expected to total over 4GW at 31 March 2019, with actual capacity subject to the potential sale of stakes of up to 50% in the Stronelairg and Dunmaglass onshore wind farms.
The assets of SSE Renewables are all in the UK and Ireland, and the business’ focus will remain on those markets. In line with its Business Update in May, SSE is also seeking to extend its core competences in renewables energy to geographical areas beyond the UK and Ireland. The creation of SSE Renewables is expected to result in the creation of more opportunities in different markets, and SSE has begun the process of early assessment of potential opportunities.
SSE Renewables will have its own and dedicated and experienced management team. Jim Smith currently SSE’s Managing Director, Generation, has been appointed Managing Director Designate for SSE Renewables. Reporting to Wholesale Director Martin Pibworth, he will lead the work being done to prepare for the formation of the new entity, which is expected to be largely complete by the end of the current financial year. Management of and reporting in relation to the new entity is likely to begin in advance of its formal incorporation.
The creation of SSE Renewables will lead to five key opportunities:
· An experienced management team, supported by skilled employees, focused entirely on creating value from developing, operating and owning renewable energy assets, including fulfilling the potential of offshore wind and delivering renewed impetus in onshore wind;
· Enhanced ability to raise finance from diverse sources, building on SSE’s position in project financing renewables projects and as the largest issuer of green bonds from the UK corporate sector;
· Greater scope to secure growth through entering into strategic and financial partnerships and joint ventures with companies with a shared commitment to decarbonisation of the electricity system, taking forward SSE’s established capability in partnering with other organisations;
· More potential to add to future growth opportunities by extending its core competencies in renewable energy to other technologies and geographies, where the right risk/reward balance can be achieved; and
· Greater visibility for investors, with comprehensive financial and operational disclosures through renewables group-specific reporting.
As a core business in the SSE group, SSE Renewables will be complemented by SSE’s interests in flexible thermal generation assets. These assets are of significant value to an electricity system which features an increasing amount of energy from renewable, but variable, sources. They are therefore crucial to enabling the transition to a low carbon electricity system.
SSE Renewables’ exposure to variations in the value of energy commodities will be managed by SSE’s Energy Portfolio Management division, and in line with the document setting out SSE’s hedging approach, published today (14 November). It will also benefit from other services shared across the SSE group.
Alistair Phillips-Davies, Chief Executive of SSE plc, said:
“The creation of SSE Renewable is the latest step in our strategic goal to give greater focus to renewable energy, give investors greater visibility of assets and earnings in the future and give each of the businesses in SSE the best platform for success.
“Success will mean maximising SSE’s contribution to the ongoing decarbonisation of the electricity system and creating value for shareholders and society in a sustainable way, with a clear focus on maximising future growth opportunities.
“SSE has a unique portfolio of renewable energy assets and a valuable pipeline of future opportunities. The creation of SSE Renewables will build on SSE’s established skills in asset management and large capital project development and put the business in a strong position to evolve and succeed in a rapidly-changing electricity sector.”