Green energy giant slashes investment by £3bn in blow to Miliband

Yahoo

21-05-2025

Energy giant SSE has slashed its green energy spending plans by £3bn and warned it will not hit its 2030 net zero goals.
The power company told shareholders it was 'unlikely' to meet targets for renewable output amid the 'changing macroeconomic environment and wider delays to planning processes'.
SSE, one of the operators of Britain's high-voltage power grid, said it would reduce spending on renewables by £3bn over the next five years, blaming planning and policy delays by the UK and Scottish governments.
Alistair Phillips-Davies, the SSE chief executive, said the company would cut its investment expectations to around £17.5bn 'reflecting financial discipline ... and consent phasing in networks'. 'Consent phasing' is where separate planning permissions must be granted for each stage of construction.
It follows last month's announcement that it would cut 300 jobs from its renewables business.
The bulk of the remaining investment cash – about 60pc – will be invested in SSE's transmission and distribution networks with only about 30pc going to new renewables such as offshore wind.
Mr Phillips-Davies said SSE's portfolio had to be built to 'withstand risk and uncertainty'.
He said: 'What we see on planning is that historically, policies haven't been conducive to getting many planning consents approved.
'Our Berwick Bank offshore wind project has been on [Scottish] ministers' desks for about three years now. In transmission our Argyll-Skye link project is well over two and a half years.'
He said SSE was continuing work on its massive Dogger Bank wind farm 80 miles off England's north-east coast, with the first phase due to become operational this year, eventually powering 6m homes on a windy day.
However, Berwick Bank, which is potentially even larger, has been awaiting Scottish ministerial approval for so long that it missed out on the opportunity to take part in last year's government funding round.
Mr Phillips-Davies suggested that Ed Miliband will need to also raise subsidy rates for future offshore wind projects or risk energy companies abandoning vital projects.
That warning came as the Energy Secretary aims to commission thousands more offshore wind turbines in another funding round this autumn.
The subsidy system, funded by levies on consumer bills, offers developers a guaranteed minimum price for the power they produce and has been getting steadily more expensive.
It follows last month's announcement by Danish developer Orsted that it had abandoned plans to develop Hornsea 4, another giant wind farm, even though it had been guaranteed a minimum price of £85 per megawatt hour – among the highest rates ever offered.
Mr Phillips-Davies said Orsted's decision suggested that Mr Miliband might have to offer even more to future developments.
He said: 'This might tell you that companies in a similar position [to Orsted] might seek a higher price.'
SSE reported £2.4bn in adjusted operating profit in the year to the end of March. Profit after tax was £1.8bn.
Its distribution and transmission divisions are among the most profitable, generating £1bn in adjusted profits – up from £691m last year.
The distribution division runs the networks linking homes and businesses to the national grid across central southern England and the north of Scotland. Its transmission division runs the high voltage grid in northern Scotland.
The profits for SSE Renewables division also surged by 25pc to £1bn, up from £833m last year.
Mr Phillips-Davies said he hoped planning processes would accelerate. 'What's been encouraging is that the administration in Scotland has committed to 52-week turnarounds on planning, and indeed, the new Labour Government are putting in place a new Planning Bill and new planning regime, which we would hope will significantly accelerate applications.'
He warned that a move to zonal pricing with prices set by local supply and demand, would risk introducing confusion and a new set of delays at an already-turbulent time for UK energy.
'Zonal pricing just represents a dislocation in the market, significantly increasing costs and jeopardizing 2030 delivery. It's a really bad idea.'