LONDON (ShareCast) - (Sharecast News) - Power generator SSE upgraded annual earnings expectations as higher gas prices and better storage offset lower-than-expected renewables output.
The company on Friday lifted adjusted earnings per share to more than 150 pence from previous guidance of at least 120 pence.

"This reflects the strength and stability of its balanced mix of regulated and market-facing businesses with continuing good availability and supportive market conditions leading to flexible generation plant and gas storage optimisation significantly offsetting lower than planned renewables output and hedge buy-back costs," the company said in a trading update.

SSE group already produces renewable energy from its wind farms as well as hydropower plants, and is aiming to further increase output.

However, electricity production from renewables was around 10% "below plan" in the nine months to the end of 2022 due to continued periods of "unseasonably calm and dry weather", according to SSE. It also cited delays to the construction of its Seagreen offshore wind farm off the cost of Angus in the North Sea.

The farm will count 150 wind turbines once completed, which is expected to be this summer assuming normal weather and planned vessel availability, the company added.

SSE said its gas-fired plants fleet 'helped ensure security of supply for customers', as low temperatures in December sparked fears of power cuts and blackouts.

'SSE is performing well in a shifting and volatile energy landscape, underlining the strength of our balanced business mix and the quality of our assets, and we are well placed to deliver a strong financial performance for the full year," said chief executive Gregor Alexander.

'We are responding to the cost of living and energy crises by investing record amounts and remain committed to investing additional profit we make into critical low-carbon electricity infrastructure.'

The company plans to pay a full-year dividend of 85.7p a share plus retail price index for 2023. It will then rebase the 2023/24 payout to support "significant investment and growth plans" and then increase them by at least 5% in 2025 and 2026.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown said: "The British power firm remains on course to deliver record investment in excess of £2.5bn this year. The turbo-charged efforts to accelerate its transition to renewables is a bold and admirable move. The push to be at the forefront of the UK's energy transition puts the group in a unique position to potentially enjoy steeper growth ahead."

"However, renewables carry an inherent risk which this latest trading update highlights - they're not always reliable sources of energy. To some degree, you're at the mercy of mother nature."

"Unseasonably calm and dry weather this winter left the group's renewable output some 10% lower than planned. This means that gas-fired generation plants will still have to make up the energy shortfall for now."

Reporting by Frank Prenesti for Sharecast.com

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE