Slide 1: Time to Power Change: Interim Results and Strategic Update
TIME TO POWER CHANGE INTERIM RESULTS AND STRATEGIC UPDATE 17 November 2021
Slide 2: Disclaimer
DISCLAIMER This presentation contains forward-looking statements about financial and operational matters. Because they relate to future events and are subject to future circumstances, these forward-looking statements are subject to risks, uncertainties and other factors. As a result, actual financia
Slide 3: Agenda
AGENDA 17 November 2021 08:30 Interim Results to 30 September 2021 09:00 Strategic Update – SSE’s Net Zero Acceleration Programme 10:00 Q&A 3
Slide 4: Safety
SAFETY Interim Results for six months to 30 September 2021 Safety • Six more injuries recorded versus same period last year • TRIR1 fell from 0.19 to 0.16 compared to the same period last year1 Total recordable injuries TRIR1 35 0.2 30 25 0.15 20 0.1 15 10 0.05 5 0 0 2 HY22 HY212 HY22 HY21 1 Total R
Slide 5: Progress and delivery over last six months
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan PROGRESS AND DELIVERY OVER LAST SIX MONTHS Highlights from SSE’s net zero-focused electricity infrastructure strategy Reshaping the Group for net zero Delivering on infrastructure projects • Completion of Contracting & Ra
Slide 6: Financial performance to September 2021
FINANCIAL PERFORMANCE TO 30 SEPTEMBER 2021 6
Slide 7: Income statement – continuing operations
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan INCOME STATEMENT – CONTINUING OPERATIONS Interim Results for six months to 30 September 2021 Key commentary Adjusted 1 HY22 HY21 • HY21 included c.£115m adverse effect from coronavirus, primarily impacting Operating Profi
Slide 8: Impact from recent market volatility
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan IMPACT FROM RECENT MARKET VOLATILITY Interim Results for six months to 30 September 2021 • Calm weather conditions across the UK over summer led to renewables output shortfall • However direct exposure to short term commo
Slide 9: Income statement – core businesses
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan INCOME STATEMENT – CORE BUSINESSES Interim Results for six months to 30 September 2021 Movement Adjusted EBIT (£m) HY22 HY21 SSEN Transmission 181.7 115.2 • Earlier phasing of allowed revenue across T2, partially offset b
Slide 10: Income statement – other businesses
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan INCOME STATEMENT – OTHER BUSINESSES Interim Results for six months to 30 September 2021 • Strong BM performance and higher Adjusted EBIT (£m)1 HY22 HY21 achieved prices Total core businesses 360.4 371.1 • HY21 included £2
Slide 11: Fair value remeasurements
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan FAIR VALUE REMEASUREMENTS Interim Results for six months to 30 September 2021 IFRS 9 remeasurements • EPM and Gas Storage, through exposure to unsettled commodity contracts and physical gas inventory, are subject to unrea
Slide 12: Reconciling adjusted and reported
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan RECONCILING ADJUSTED AND REPORTED Interim Results for six months to 30 September 2021 • Mark to market movements on Income Statement - £m HY22 predominantly gas derivatives • Broadly offset by contracts designated Adjuste
Slide 13: Capital and investment expenditure
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan CAPITAL AND INVESTMENT EXPENDITURE Interim Results for six months to 30 September 2021 Adjusted Capex (£m) HY22 Share % • £57m reinforcements of East Coast SSEN Transmission 291.0 28 • Shetland HVDC link SSEN Distribution
Slide 14: Disposal of non-core assets
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan DISPOSAL OF NON-CORE ASSETS Interim Results for six months to 30 September 2021 FY21 HY22 Total Completion Headline Agreed Disposals, £m Recognised Recognised Recognised Status Consideration Gain / (Loss) Gain / (Loss) Ga
Slide 15: SSE's pension schemes
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSE’S PENSION SCHEMES Interim Results for six months to 30 September 2021 Pensions Asset/(Liability) - £m HY22 FY21 Scottish Hydro Electric Pensions Scheme (SHEPS) 501.7 543.1 Southern Electric Pension Scheme (SEPS) (63.7
Slide 16: Maintaining a strong balance sheet
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan MAINTAINING A STRONG BALANCE SHEET Interim Results for six months to 30 September 2021 HY22 FY21 HY21 Adjusted net debt and hybrid capital - £m 9,611 8,899 10,622 Average debt maturity (excl. hybrid) – years 7.2 7.4 6.9 A
Slide 17: Remunerating shareholders
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan REMUNERATING SHAREHOLDERS Interim Results for six months to 30 September 2021 • Strong operational performance and strategic progress • HY22 Adjusted EPS of 10.5 pence – slightly above pre-close guidance • The Group reite
Slide 18: Agenda
AGENDA 17 November 2021 08:30 Interim Results to 30 September 2021 09:00 Strategic Update – SSE’s Net Zero Acceleration Programme 10:00 Q&A 18
Slide 19: SSE's Net Zero Acceleration Programme
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSE’S NET ZERO ACCELERATION PROGRAMME A bold and comprehensive plan to 2026 creating the optimal pathway for accelerated growth FULLY-FUNDED ENHANCED ACCELERATING GROWTH AT PLATFORM FOR GROWTH £12.5BN INVESTMENT PLAN ATTR
Slide 20: Reshaped and ready to seize opportunities
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan RESHAPED AND READY TO SEIZE OPPORTUNITIES SSE represents a balanced mix of businesses uniquely positioned for the transition to net zero SSE Renewables SSE Thermal Wind generation Hydro and storage Low-carbon flexible gen
Slide 21: Leading in the net zero transition
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan LEADING IN THE NET ZERO TRANSITION Leading capabilities and investment pipeline position SSE as UK’s clean energy champion +20 GW low-carbon The UK is leading the charge flexibility needed by 2030 UK TARGET on net zero gl
Slide 22: SSE plc: Net Zero Acceleration Programme
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSE PLC: NET ZERO ACCELERATION PROGRAMME The optimal pathway to maximise shareholder value and growth into the 2030s FULLY-FUNDED ENHANCED …DELIVERING ACCELERATED GROWTH …AND THE PLATFORM FOR INVESTMENT PLAN… AT ATTRACTIV
Slide 23: The optimal value-creating plan
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan THE OPTIMAL VALUE-CREATING PLAN Creating options and opportunities for investment and growth Board review concluded this five-year investment plan represents the optimal pathway to: 1. Drive sustainable long-term value fo
Slide 24: SSE's commitment to net zero
Strategic Update – SSE’s Net Zero Acceleration Programme SSE’S COMMITMENT TO NET ZERO 24
Slide 25: A powerful purpose, vision and strategy
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan A POWERFUL PURPOSE, VISION AND STRATEGY Focused on creating value for all stakeholders in the transition to net zero OUR STRATEGY OUR PURPOSE To provide energy needed To create value for shareholders and today while build
Slide 26: Electricity at the core of the energy system
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan ELECTRICITY AT THE CORE OF THE ENERGY SYSTEM Net zero by 2050 requires rapid deployment of innovative clean energy technologies Global electricity generation by technology to 20501 UK electricity demand under net zero sce
Slide 27: Lower carbon, higher flexibility
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan LOWER CARBON, HIGHER FLEXIBILITY Renewables dominated electricity systems needs network investment and low-carbon flexibility SSE actual and forecast generation output (2007–31) 60 50 Generation output (TWh) 40 > 90% rene
Slide 28: 1.5°C-aligned science-based targets
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan 1.5°C-ALIGNED SCIENCE-BASED TARGETS Acceleration of 2030 carbon targets to align to the SBTi power sector 1.5°C-aligned targets SSE’s Scope 1 GHG Intensity SSE’s absolute scope 1 and 2 GHG emissions 700 30 600 25 500 20 4
Slide 29: Market leading capabilities and pipeline
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan MARKET LEADING CAPABILITIES AND PIPELINE SSE is delivering the energy needed today, whilst delivering growth into net zero OUR 2031 DELIVERING TODAY PIPELINE FOR TOMORROW TARGETS Operating 3.8GW (gross) ~10GW pipeline
Slide 30: SSE plc: Net Zero Acceleration Programme
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSE PLC: NET ZERO ACCELERATION PROGRAMME The optimal pathway to maximise shareholder value and growth FULLY-FUNDED ENHANCED …DELIVERING ACCELERATED GROWTH …AND THE PLATFORM FOR INVESTMENT PLAN… AT ATTRACTIVE RETURNS INTO
Slide 31: A bold five-year investment plan
Strategic Update – SSE’s Net Zero Acceleration Programme A BOLD FIVE-YEAR INVESTMENT PLAN 31
Slide 32: A bold five-year investment plan
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan A BOLD FIVE-YEAR INVESTMENT PLAN Summary of plan to 2026 £12.5bn net capex investment1 +4GW net installed renewable capacity Group Targets 14 8 ~2x 12 10 +65% 6 5 - 7% p.a. 8 GW 4 £bn 6 Adjusted EPS CAGR 4 2 2 0 0 ~4.5x P
Slide 33: Accelerating investment in net zero
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan ACCELERATING INVESTMENT IN NET ZERO Optimising capital allocation between net zero-focused businesses Previous five-year plan to 2025 New five-year plan to 2026 An optimum mix ~40% ~40% of regulated and unregulated Distri
Slide 34: High proportion of plan is committed
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan HIGH PROPORTION OF PLAN IS COMMITTED Majority of five-year planned capital investment is committed, with visibility over uncommitted 8 Committed vs uncommitted capex by division to FY26 7 ~60% COMMITTED 6 ~£7.5bn of inves
Slide 35: Investment criteria and partnerships
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan INVESTMENT CRITERIA AND PARTNERSHIPS Disciplined capital investment criteria with efficient use of partnerships for risk management SSE INVESTMENT CRITERIA AND PARTNERSHIP FRAMEWORK • Simple framework, applied to support
Slide 36: Asset disposals – minority networks sale
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan ASSET DISPOSALS – MINORITY NETWORKS SALE Asset recycling to fund value creation for the Group Minority disposal would create greater Electricity networks RAV growth (stylised) long-term value for the Group • Unlocks premi
Slide 37: Dividend certainty to 2026
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan DIVIDEND CERTAINTY TO 2026 A rebased dividend to enable significant growth across the Group FY22 and FY23 RPI increases each year, as per previous dividend plan Scrip dividend FY24 Dividend rebase to 60p per share capped
Slide 38: Maintaining a strong credit rating
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan MAINTAINING A STRONG CREDIT RATING Business mix, funding plans and dividend aligned with investment grade credit rating CREDIT TARGETS • Aligned with 4.5x target net debt to STRONG INVESTMENT GRADE RATING EBITDA ratio1 Cr
Slide 39: Targeted returns in high quality assets
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan TARGETED RETURNS IN HIGH QUALITY ASSETS Common capabilities across the Group drive favourable project returns At least 10% 7-9% Equity returns on Joint Return on equity (RoE)1 Venture projects, excluding developer profits
Slide 40: Visibility of growth in operational earnings
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan VISIBILITY OF GROWTH IN OPERATIONAL EARNINGS Earnings growth supports organic investment and progressive shareholder returns • Five-year plan optimises capital allocation between businesses, balancing risk and financial e
Slide 41: Fully-funded plan for accelerated growth
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan FULLY-FUNDED PLAN FOR ACCELERATED GROWTH Sources and uses of cash for 2026 investment plan provide optimal pathway for SSE NET ZERO FOCUS 20 < £3bn ~ £18bn • ~ 90% of capex invested 18 into low-carbon 16 ~ £3bn3 infrastru
Slide 42: Delivering accelerated growth
Strategic Update – SSE’s Net Zero Acceleration Programme DELIVERING ACCELERATED GROWTH 42
Slide 43: SSE Renewables – accelerating investment
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSE RENEWABLES – ACCELERATING INVESTMENT Five-year investment plan to 2026 Updated £5bn capex plan1 Capacity additions2 Earnings profile Pipeline under ~1.4GW ~8GW Adjusted EBITDA construction / due FID3 50% 2.6GW 11-12%
Slide 44: SSE Renewables – accelerating growth
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSE RENEWABLES – ACCELERATING GROWTH Leading capacity and output growth across the next decade 14 Trebling >13GW 50 renewables > 13 12 capacity to 40 > 13 GW 10 ~8GW Capacity (GW) Targeting Output (TWh) 8 > 13 30 fivefold
Slide 45: SSE Renewables – growing the pipeline
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSE RENEWABLES – GROWING THE PIPELINE A superior pipeline with focus on opportunities to enhance growth ~ 10GW SECURED PIPELINE AT FY21 GROW AND SUSTAIN PIPELINE AT > 15GW by FY26 >9 > 15 15 60% 1.5 ~10 ~4 additions 10 1.
Slide 46: SSE Renewables – pipeline and prospects
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSE RENEWABLES –PIPELINE AND PROSPECTS High quality pipeline options, with opportunities to sustainably grow into the next decade DUE FID OR IN CONSENTED REQUIRING CONSENT SECURED PIPELINE FUTURE PROSPECTS1 CONSTRUCTION 1
Slide 47: SSE Renewables – offshore development
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSE RENEWABLES – OFFSHORE DEVELOPMENT Offshore wind options under development and deliverable within the next 10 years Project 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Seagreen 1A Development Construction 36
Slide 48: SSE Renewables – international expansion
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSE RENEWABLES – INTERNATIONAL EXPANSION Carefully selected international markets are providing attractive opportunities to grow pipeline East Asia Strong growth in regions SSER is exploring Offshore Wind 125 • Joint Owne
Slide 49: SSE Renewables: investment into Japan
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSE RENEWABLES: INVESTMENT INTO JAPAN Attractive early development opportunities as Japan reduces nuclear reliance Market policy Market Policy Outlook outlook • Structure: Energy sector liberalisation completed in 2016 an
Slide 50: SSE Renewables – hydro options
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSE RENEWABLES – HYDRO OPTIONS Current portfolio plus pumped storage development at Coire Glas Decades of clean, flexible power • 84 hydro stations with 1,459MW capacity, including 300MW of pumped storage and 750MW of fle
Slide 51: SSE Thermal – critical flexibility and H2 options
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSE THERMAL – CRITICAL FLEXIBILITY AND H2 OPTIONS Leading in low-carbon thermal with attractive growth optionality • Critical flexibility gives security of supply and stability of price in wind-dominated system Peterhead
Slide 52: Customer businesses – providing green power
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan CUSTOMER BUSINESSES – PROVIDING GREEN POWER Offering net zero-aligned solutions and a route to market for SSE Renewables Distributed Energy SSE Business Energy SSE Airtricity • Developing >1GW combined battery / • Busines
Slide 53: SSE Networks – Transmission and Distribution
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSE NETWORKS – TRANSMISSION AND DISTRIBUTION Regulated electricity networks are key enablers of net zero 20 £15-18bn 18 RAV by 2031 (gross) 16 14 8-9% gross CAGR 12 >£5bn 10 investment1 required during five 8 years to 202
Slide 54: SSEN Transmission – a network for net zero
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSEN TRANSMISSION – A NETWORK FOR NET ZERO Exceptional RAV growth expected through RIIO-T2 to enable net zero 5-year Transmission capex to FY26 Key projects to FY26 Exceptional RAV growth to FY26 Net capex of >£3bn1 Expec
Slide 55: SSEN Transmission – RIIO-T3 and beyond
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSEN TRANSMISSION – RIIO-T3 AND BEYOND Highly attractive long-term growth trajectory in line with renewables growth Forecast RAV growth to FY31 • Installed renewable capacity forecast to increase materially out to 2050 •
Slide 56: SSEN Distribution – enabling electrification
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSEN DISTRIBUTION – ENABLING ELECTRIFICATION Significant RAV growth from net zero investment connecting and electrifying the UK 5-year Distribution capex to FY26 Diverse and unique geographies Significant RAV growth to FY
Slide 57: SSEN Distribution – sustainable growth
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSEN DISTRIBUTION – SUSTAINABLE GROWTH Distribution will be a key enabler of the accelerating electrification of heat and transport • Connected EV charging and heat pump capacity forecast to increase Forecast RAV growth t
Slide 58: Summary
Strategic Update – SSE’s Net Zero Acceleration Programme SUMMARY 58
Slide 59: Commitment to sustainable long-term growth
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan COMMITMENT TO SUSTAINABLE LONG-TERM GROWTH Investment plan delivers optimal platform for growth to 2031 • Fully-funded, £12.5bn investment plan to FY26 for accelerated growth to net zero • Optimised capex maximises Total
Slide 60: SSE plc: Net Zero Acceleration Programme
Interim Net Zero Five Year Strategy Delivery Summary Results Acceleration Plan SSE PLC: NET ZERO ACCELERATION PROGRAMME The optimal pathway to maximise shareholder value and growth into the 2030s FULLY-FUNDED ENHANCED …DELIVERING ACCELERATED GROWTH …AND THE PLATFORM FOR INVESTMENT PLAN… AT ATTRACTIV
Slide 61: Appendix
APPENDIX
Slide 62: SSE's ESG credentials
SSE’S ESG CREDENTIALS Aiming for leading ESG performance ESG Score: 63/100 ESG Rating: AAA Score: A- 56/100 In the top 8% of 139 global Scored as ‘Leadership’ for 69th percentile ranking within Scored as ‘Advanced’ utilities climate change the Electric Utilities industry Oct 2020 Sep 2021 Feb 2021 N
Slide 63: Delivering on our previous investment plan
DELIVERING ON OUR PREVIOUS INVESTMENT PLAN Breadth and quality of growth options mean acceleration required Previous plan announced in May 2020 is COMPREHENSIVE PLAN KEY OBJECTIVES ahead of schedule REMUNERATE • Cash proceeds from disposal of non-core SHAREHOLDERS assets expected to exceed £2.7bn by
Slide 64: SSE Renewables – current operations
SSE RENEWABLES – CURRENT OPERATIONS Diversity of key assets across geographies and technologies Technology Geography Net Capacity (MW) Map of operational clusters Scotland 235 England 252 Beatrice Total Offshore Wind 487 Scotland 1,180 England 68 Northern Ireland 122 Republic of Ireland 568 Total On
Slide 65: SSE Renewables – leader in offshore wind
SSE RENEWABLES – LEADER IN OFFSHORE WIND Leading construction of more offshore wind than anyone else in the world 504MW operational since 2012 588MW operational since 2019 1,075MW in construction 3,600MW in construction or due FID Depth of up to 55m; Distance from shore >10km Depth of up to 62m; Dis
Slide 66: Key project update: Seagreen offshore wind farm
SSE RENEWABLES – KEY PROJECT UPDATE Seagreen offshore wind farm Capacity 1,075MW Turbine 10MW Vestas Average load factor c54% Annual production c5TWh SSE share 49% CfD Allocation Round 4 First Seagreen jacket being installed Onshore cable pulling underway • Potential to bid remaining 58% uncontracte
Slide 67: Key project update: Dogger Bank offshore wind farm
SSE RENEWABLES – KEY PROJECT UPDATE Dogger Bank offshore wind farm Capacity 3,600MW Turbine 13 & 14MW GE Average load factor c57% Annual production c18TWh SSE share 40% Onshore cables for Dogger Bank A and B arriving for installation • Progressing onshore construction of cabling and substation for p
Slide 68: Key project update: Viking onshore wind farm
SSE RENEWABLES – KEY PROJECT UPDATE Viking onshore wind farm Capacity 443MW Turbine 4.3MW Vestas Average load factor c48% Annual production Almost 2TWh SSE share 100% Cement pouring and smoothing at Viking turbine foundation Construction is progressing well with work on civils and DC substation cont
Slide 69: SSE Renewables – project assumptions
SSE RENEWABLES – PROJECT ASSUMPTIONS Assumed future ownership percentages used as basis for slides 43 - 46 Technology Project Gross Current SSE Assumed future SSE Net Capacity Capacity (MW) ownership ownership Additions (MW) Viking 443 100% 100% 443 Yellow River 105 100% 100% 105 Strathy South 208 1
Slide 70: SSEN Distribution - RIIO-ED2 draft plan
SSEN DISTRIBUTION - RIIO-ED2 DRAFT PLAN Powering Communities to Net Zero Ambitious stakeholder-led plan to build net zero resilience and enable local electrification • £4.1bn in baseline investment (gross) proposed from 2023 to 2028 • an increase of around 36% on equivalent ED1 period • If agreed, R
Slide 71: Reconciliation of gross to net capex
RECONCILIATION OF GROSS TO NET CAPEX Impact of partnerships, project financing1 and minority interests2 Renewables Transmission Distribution Other • Gross capex represents SSE’s gross consolidated share of capex invested in each business, based on current SSE ownership and including any capex funded