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Investment and Capital Expenditure
Central to SSE’s strategic framework is efficient and disciplined investment in a balanced range of
economically-regulated and market-based energy businesses. This means that investment should be
in line with SSE’s commitment to strong financial management and consistent with the maintenance
of a balanced range of assets within SSE’s businesses.
Investing efficiently in energy assets that the UK and Ireland need in 2016/17
SSE invests in a balanced range of businesses across the energy sector and invests only in projects
for which returns are expected to be clearly greater than the cost of capital. All projects complement
SSE’s existing portfolio of assets and are governed and executed in an efficient manner and in line
with SSE’s commitment to strong financial management.
In the six months to 30 September 2016 SSE’s investment and capital expenditure totalled £782.4m.
This included:
A major investment programme in electricity networks: the switching on of the first section of
an overhead link between Knocknagael and Kintore represented a key milestone in the
Caithness-Moray electricity transmission link project. The project is the largest capital project
ever undertaken by SSE and is on schedule for completion in 2018. This investment, alongside
continued upgrading of the electricity distribution network to meet the changing needs of
customers, will further increase the total Regulated Asset Value (RAV) of SSE’s networks
businesses;
Further investment in renewable energy in GB and Ireland: progress was made to increase
SSE’s renewable energy portfolio in GB with projects to be delivered through the Renewables
Obligation (RO), which also applies in Northern Ireland, Contracts for Difference (CfD) and
Renewable Energy Feed in Tariff 2 in Ireland. Progress has been made at projects including the
173 MW Clyde Extension; the Beatrice offshore wind farm (SSE share 235MW); and Galway
Wind Park (SSE share 120MW), which is the largest wind farm in Ireland; and progress has also
been made with regard to the Stronelairg onshore wind farm (225MW), which SSE has decided
to construct with a view to accreditation under the RO. These projects, along with further
onshore wind projects in construction or pre-construction, will add just over 1GW to SSE’s
renewable energy portfolio, taking SSE’s total renewable energy capacity to almost 4GW;
Fulfilling a regulatory obligation to install smart meters: SSE made further progress with its
regulatory obligation to offer smart meters to all Energy Supply customers. At 31 October 2016
SSE had installed over 340,000 smart meters in customers’ homes. Post installation, SSE’s
meters will transfer to a contracted Meter Asset Provider, therefore SSE’s investment and capital
expenditure excludes the capital cost of installation and meter assets. Subject to the delivery
timetable of the critical central infrastructure, and other GB-wide technical constraints affecting
the progress of smart metering, SSE intends to ramp up its rollout significantly over 2017/18.
SSE announced in March 2016 that investment and capital expenditure was expected to be in the
range of £5.5 - 6bn across the four years to March 2020. Following the decision to proceed with the
construction of the 225MW Stronelairg onshore wind farm, it is now expected to be around £1.85bn
in 2016/17, which would be SSE’s highest-ever total in one financial year, and in 2017/18 it is
currently expected to be around £1.75bn.
SSE is therefore maintaining investment momentum and it is now expected that total investment
and capital expenditure will be closer to £6bn in this period to 2020. Around £5bn of that is already
committed, predominantly in economically-regulated electricity networks and governmentmandated
renewable energy projects.
Completing the disposal of over £1bn of non-core assets to support future investment
As part of its long-standing strategic commitment to efficiency and disciplined investment, in 2014
SSE commenced what was called a value programme to dispose of assets which were not core to its
future plans, which resulted in a disproportionate burden, or which could release capital for future
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