SSE PLC (LSE:SSE) has outlined a £33 billion, five-year strategy to significantly increase its investment allocation into UK electricity infrastructure.
Most of the investment, around £27 billion, will be directed towards regulated UK electricity networks, resulting in a major expansion SSE’s existing SSEN Transmission business, which owns and operates the high-voltage electricity network in the north of Scotland. The investment will be aimed at improving overhead lines, underground cables and substations to better transport electricity to major towns and cities where it is needed.
Of the remaining capital, around 15% will go to Distribution (getting electricity from substations to homes) and 18% into the construction of existing renewables and new programmes.
The company expects the investment programme to more than treble its regulated asset base, delivering gross RAV growth at a compound annual rate of approximately 25%.
Earnings are forecast to rise in tandem, with adjusted earnings per share targeted to reach 225-250p by the end of the period, representing a 7-9% compound annual growth rate.
Around 80% of group EBITDA would be index-linked by 2029/30, reflecting the increased weighting to regulated assets.
The funding structure includes £21 billion from operational cashflows, £14 billion from additional net debt and hybrid capital, £2 billion from an equity placing, and a further £2 billion from asset sales.
The group also reaffirmed its dividend policy, maintaining a baseline payout of 64.2p and targeting annual growth of 5–10%.
The £2 billion equity issue was launched simultaneously, via a placing, retail offer and director subscription. The retail offer will be through the RetailBook platform, allowing UK retail investors an opportunity to contribute up to around £7 million.
“This Transformation for Growth investment plan is built on a once-in-a-generation opportunity to upgrade the UK electricity network and build a cleaner, more secure and more affordable energy system,” said chief executive Martin Pibworth.
The company said roll-out of cleaner technologies to upgrade energy systems, adopt electrification and accelerate AI in the UK and Europe “places electricity networks together with clean and flexible generation at the heart of the transition”.
“The foundations for this plan have been laid over several years,” SSE said, with a fivefold increase in headcount in the Transmission business, meaning the group “has the platform, the capabilities and the resource to deliver this once-in-a-generation investment opportunity”.
SSE also reported interim result, with adjusted earnings per share of 36.1p, in line with expectations, with £1.6 billion invested, mostly in regulated networks. Guidance for the current and next full-year’s earnings and operating profit was reaffirmed.
