Operating profits from the gas and thermal energy division alone of vertically integrated generator-retailer SSE soared to £248million on an adjusted basis in the half year to September, up fourfold on 2021’s equivalent period.  Within that division, profits from gas storage alone rocketed nearly five-fold to £148 million.

Amid continuing political pressure to increase windfall taxes on energy company’s profits, half year results released by the Perth-headquartered combine this morning showed its group pre-tax profit soar to £560 million, up over three times on last year’s £174 million.

Aside from that £248m treasure hoard in gas and thermal energy, the three remaining pillars of SSE’s £560m pre-tax bonanza saw divisional profits

  • from renewables dip by £3m to £22.5m,
  • from its distribution arm rise £20m to £174m
  • earnings from transmission operations surge £27m to £208 million.

Thermal generation, overwhelmingly from gas, accounted for around 70% of SSE’s total of just under 13,000 GWh electricity produced over the six months to September.

Wind and hydro power accounted for only 30% of the firm’s generation over 2022’s dry, becalmed summer. But renewables accounted for £ 426 million – or 38% – of the half year’s total £1.11 billion capital expenditure.

Expansion into onshore wind & solar in southern Europe carried a £640 million price tag. The figure included September’s £528m payment for Siemens-Gamesa’s 3.8GW of turbines from France to Greece.

In offshore wind, the 1GW Seagreen park 15 miles off Fife passed its first current in August. SSE owns 49%.

Twelve months after unveiling the generator-retailer’s £12.5 billion, five year Net Zero Action Plan, CEO Alistair Phillips-Davies today hailed SSE’s half-year numbers as the product of “the right strategy at the right time”.

Accommodating in six short months the effects of Putin’s war & resulting sanctions, of three British prime ministers, and resulting market and political turmoil, SSE’s boss congratulated his 42,000 staff for their ability “to respond directly to an energy crisis few of us could have foreseen”.

“Lower-than-expected renewables output ..more than offset by earnings derived from gas storage and thermal assets that have been responding to system demand when needed most”, said Phillips-Davies.

In terms of asset value, SSE’s £9 billion sunk into regulated network businesses is insulated from its kit supporting its highly competitive generation, trading and storage businesses.

Indexing to inflation protects value in the capital-intensive “wires and switches” side. SSE boasts it does the same for renewables contracts and capacity payments.

Hedging its future sales on a weighted average basis, SSE expects wind-generated power to be raising on average £74 and £78 per MWh for each of the next two years, and £114 and £118 for the years to September 2025 and 2026 respectively.

Net debt rose slightly to a whisker south of £ 1 billion, with most redeemable after 6.5 years. Covering its interest bill 4.2 times from EBITDA earnings, SSE says its average cost of debt is 3.83%, barely changed for 18 months.

By lunchtime the FTSE-100 quoted enterprise’s share price had dipped 1.3%, valuing it at £17.8 billion.


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