The chief executive of British power firm SSE says a rapid build-out of renewable projects can help the U.K. to secure its energy security and bring costs down for consumers.
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British utility SSE unveiled a 33 billion pound five-year investment plan on Wednesday, including a 2 billion pound ($2.68 billion) equity fundraising, as it seeks to upgrade the UK’s regulated electricity networks and bolster its renewables business.
SSE’s shares rose more than 11% to a record high. Analysts were positive about the plan which provided clarity on the company’s growth outlook.
The company’s investment plan highlights Britain’s need to overhaul its aging power grid to meet rising electricity demand from electric vehicles and artificial intelligence.
SSE CEO Martin Pibworth said it was a once-in-a-generation opportunity to upgrade critical infrastructure.
“Our world is rapidly electrifying, and we need to build, connect and transport ever greater volumes of homegrown power to homes and businesses to power the digital age,” Pibworth said.
About 80% of the planned spending, or 27 billion pounds, will go towards upgrading the regulated electricity networks, with the remainder invested selectively in renewables and flexible generation assets, SSE, one of the largest generators of renewable and flexible energy in the UK and Ireland, said.
“The new plan brings clarity on the balance sheet and the company’s growth outlook,” Jefferies analyst Ahmed Farman said in a note. “The equity raise shouldn’t surprise, and the 2 billion pounds equity is towards the lower-end of the scenarios we have discussed previously.”
Other European utilities are also looking to increase investment and have tapped shareholders for cash.
Last month, Ørsted announced plans to raise 59.56 billion Danish crowns, while last year Britain’s National Grid tapped shareholders for 7 billion pounds to fund its investment programme.
SSE’s plan will be funded primarily through cash flow generation and increased borrowing, alongside equity placing and plans to sell about 2 billion pounds worth of assets.
The power generator and network operator posted a 28% year-on-year drop in first-half adjusted pretax profit to 521.5 million pounds for the six months ended September 30, hurt by lower output and unfavorable weather conditions.
It maintained its full-year outlook.