SSE has set out plans to invest £40bn in clean energy over the next 10 years as it reported a near-doubling of its annual profits compared with the year before thanks in part to its fossil fuel power stations.
The Perth-based FTSE 100 company said it would carry out its record-breaking green energy plan by investing “far in excess of its earnings” after making an adjusted pre-tax profit of £2.18bn for the 12 months to the end of March, up from almost £1.16bn the year before.
The sharp increase in full-year profits came as earnings from its gas-fired power stations surged almost fourfold to £1.24bn for the last financial year, up from £331.1m the year before.
SSE has sought to downplay the soaring fossil fuel profits in the wake of Russia’s invasion of Ukraine, which triggered a jump in global energy market prices that has ignited calls for a windfall tax on the excess profits made by power generators and oil companies.
It did not face higher taxes on its profits from gas-fired power stations because the government’s energy generator levy focused on renewable power. But SSE’s renewables business made a fraction of the profit that its gas plants made last year, rising to £580m from £568.1m the year before, meaning it was required to pay only £43m under the levy.
Alistair Phillips-Davies, SSE’s chief executive, justified the low levels of tax by arguing that the UK’s energy crisis “was a gas crisis” and that its investments would help the UK move away from a reliance on gas.
SSE made “profits with a purpose” that would accelerate its plans to invest in renewable energy and reinforce the UK’s electricity grid to help speed up the UK’s climate agenda, he said.
The company has not ruled out overseas investment as part of its £40bn 10-year plan. Phillips-Davies told journalists that the company would consider investing in the US but he expected Europe to remain SSE’s core market.
“Action, not just ambition, is what is needed to provide lasting solutions to the problems of climate change, energy affordability and security – and, with a record-breaking investment programme, that is what we are delivering,” he said.
SSE runs gas-fired power stations alongside hydroelectric plants and windfarms and an electricity transmission business. The company set out a five-year plan to accelerate the UK’s net zero ambitions in 2021 by spending £12.5bn. It has increased its spending by 40% to £18bn and extended the plan to 2027.
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The new plan will include a 50% increase in capital spending for its regulated electricity networks, a 40% increase for its renewable electricity generation and a 10% increase for its low-carbon flexible thermal generation and other businesses.
“Through delivery of our societally aligned strategy we are accelerating the build-out of renewables, reinforcing the networks needed to decarbonise, providing much-needed flexible generation, and working hard to ensure no one is left behind in the transition to net zero,” Phillips-Davies said.
