SSE’s renewable energy output over spring and summer was almost a third lower than planned, as low winds and dry weather combined with high gas prices to push up energy prices.
The FTSE 100 energy supplier said on Wednesday its wind and hydro output between April 1 and September 22 was 32 per cent beneath its target — equivalent to an 11 per cent hit to its full-year production forecast.
The summer was “one of the least windy across most of the UK and Ireland and one of the driest in SSE’s hydro catchment areas in the last 70 years”, the company said in a statement.
SSE’s update is the latest sign of how unfavourable weather conditions are hitting the renewables sector.
It comes as a global gas shortage, a rebound in energy demand after coronavirus lockdown restrictions and some of the poorest wind conditions in the North Sea for more than two decades have propelled UK and continental European energy prices this month to their highest ever levels.
SSE expects to report adjusted earnings per share in the range of 7.5p to 10p for the six months to September 30. It remains confident “due to the resilience of SSE’s business mix” that it will deliver a “solid financial performance” for the full year.
It expects to recommend a full-year dividend of 80p plus inflation, with an interim payout of 25.3p in March 2022.
The shortfall has prompted at least one analyst to forecast a hit to the full-year consensus. “Overall we see at least 5 per cent downside risk to the current full fiscal year adjusted earnings of 88p a share,” said Ahmed Farman, analyst at Jefferies, in a note.
SSE has overhauled its operations to focus on low-carbon businesses such as electricity networks and renewables, and has the largest renewable electricity portfolio in the UK and Ireland.
“SSE is currently building more offshore wind than any company in the world, expanding internationally and investing in the decarbonising infrastructure that society needs,” it said in its statement.
The company is expanding into Japan, where it said it had created a joint venture with renewables group Pacifico Energy, taking an 80 per cent stake in an offshore wind development platform.
“SSE’s very deliberate mix of economically regulated and market-based businesses provides resilience against seasonal variability,” said finance director Gregor Alexander. “The operational issues we’ve faced in the first half are, by their nature, time-limited and the key months of our financial year are still to come.”