SSE Slashes Green Energy Spending and Warns of Missed Net Zero Goals

Energy powerhouse SSE has announced a dramatic £3bn reduction in its green energy spending plans, raising concerns over its ability to meet 2030 net zero targets. The company cited delays in planning processes and a challenging macroeconomic climate as key factors behind the decision. This move comes amidst shifting policies and significant hurdles in obtaining timely approvals.

Recently, SSE revealed it would lower its investment aspirations to £17.5bn over the next five years, redirecting 60% of capital towards its transmission and distribution networks. Only 30% of funds will now go towards new renewable energy projects, including offshore wind, which has been significantly impacted by planning and policy delays in the UK. SSE’s CEO, Alistair Phillips-Davies, explained that the company is exercising financial discipline while grappling with “consent phasing”, where multiple planning consents are required for different construction stages.

One example of these delays is the Berwick Bank wind project, which has been awaiting approval from Scottish ministers for nearly three years. This delay has caused it to miss prior government funding opportunities. Despite these obstacles, SSE continues to advance its Dogger Bank wind farm, an ambitious development off the north-east coast of England. When fully operational, it is expected to generate power for six million homes on particularly windy days.

SSE has expressed concern regarding the future feasibility of offshore wind projects unless more favourable subsidy rates are introduced. The abandonment of Hornsea 4 by Danish energy developer Orsted, despite being promised a record high guaranteed price of £85 per megawatt hour, has raised alarm across the industry. Phillips-Davies has warned that companies in similar positions may also reconsider their plans unless guaranteed pricing terms are adjusted.

SSE reported significant financial success over the past year, with a £2.4bn adjusted operating profit and £1.8bn in profits after tax. The company’s transmission and distribution segments performed particularly well, generating £1bn in adjusted profits, up from £691m the previous year. The renewables division saw a 25% profit rise, reaching £1bn.

Looking ahead, the company remains hopeful that planning processes will accelerate under new measures. In Scotland, a commitment has been made to turn around planning decisions within 52 weeks. Similarly, the Labour Government is working towards fast-tracking applications through a new Planning Bill. However, Phillips-Davies has raised concerns over potential zonal pricing policies, warning that such a strategy could confuse markets and further disrupt SSE’s ability to achieve its 2030 goals.