SSE has reported that it remains on course to deliver an adjusted investment and capital expenditure of around £2.5bn in the 2024 financial year, despite announcing a 15% drop in its renewables output.

The Scotland-based energy firm suggested its renewables performance had been impacted by a combination of poor weather conditions and short-term plant outages.

In a Q4 trading statement, SSE reaffirmed its FY24 adjusted earnings per share guidance of more than 150 pence, noting a “narrower range of probable financial outcomes” for the full-year, following lower than planned renewables output over the final quarter of 2023.

The group said its final full-year earnings outturn remains subject to factors such as plant availability, supportive market conditions and normal weather. SSE is expecting to soon provide an update on performance for the final months of the year in its ‘notification of closed period’ statement.

Chief financial officer at SSE, Barry O’Regan, said that Q4 had seen the business “navigate some short-term challenges”.

O’Regan added: “The strength of our balanced business mix and the growth opportunity it provides is aligned with a policy environment which increasingly recognises the essential role renewables, electricity networks and flexible power will play in the energy system of the future. Our long-term strategy remains unchanged and will deliver sustainable value for shareholders and society.”

Commenting on the energy firm’s announcement, equity analyst at Hargreaves Lansdown, Aarin Chiekrie, said that SSE’s transition towards becoming a renewable energy powerhouse is “continuing at pace”.

“The group’s five-year investment budget still stands at a lofty £20.5bn, which is more than its current market value,” Chiekrie said. “Around 90% of this budget’s been earmarked to build out its electricity networks and renewables infrastructure, turbo-charging the move towards a greener future.

“But the move comes with a hefty dose of risk as its renewable energy generation isn’t always reliable. Another quarter of unfavourable weather conditions, as well as plant outages, have left its renewables output around 15% lower than planned over the first three quarters. Fortunately, SSE still has other strings to its bow, and its flexible gas-fired plants have been on hand to plug some of the energy shortfall.”

Chiekrie also noted that SSE’s earning look to be “heavily skewed” towards the second half of the year, following the group reiterating its 150 pence share guidance.

“The current valuation suggests investors still need some assurance that SSE can deliver on its ambitious growth plans and perhaps highlights some of the uncertainties associated with renewables output,” added Chiekrie. “Investors will be keeping a keen eye for improvements on this front, but the recently reduced dividend hasn’t made the wait any easier.”

---