UK SSE plans sale of gas transmission business (Update)
(Updates with comment on gas storage business in 5th para.)
UK utility SSE plans to dispose of some non-core assets put the money into low carbon activities, the Scotland-based company said May 26. It reported an 1% increase in adjusted operating profit to £1.506bn ($1.2bn) despite a coronavirus impact of an estimated £170mn,
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The announced sale of its stake in Scotia Gas Networks would help SSE exceed the £2bn disposals target on completion, up from the £1.5bn so far. It is a financial investment for SSE, "run largely independently and the synergies with the group’s low-carbon electricity businesses are less clear," it said.
It plans to invest around £2bn largely in low carbon power projects this year and to develop "an attractive pipeline that would see SSE reach a run rate of at least 1 GW of new assets a year during the second half of this decade." It expects to exceed its target for trebling its renewable output by 2030.
Its thermal generation business made an adjusted operating profit of £160.5mn, up 5% helped by the low proportion of renewable energy in the generation mix last winter; and gas storage made an adjusted operating loss of £5.7mn, down from a gain of £3.7mn. Reported operating profit however was £2.8mn as a result of an £8.5mn rise in the value of gas held in store.
Despite the loss, it told NGW May 28 that "gas storage assets continue to play an important role in providing flexibility to the UK energy system and supporting security of supply. We are also exploring longer-term opportunities to repurpose them to store low-carbon hydrogen to support the net zero transition. Our SSE Thermal business is particularly focused on the role hydrogen can play in decarbonising flexible power generation, as well as industry, heat, transport and other key sectors."
Its gas production business made a profit of £33mn, up from £28.5mn the year before, but it is classed as a discontinued activity.
SSE said it remains committed to delivering its £7.5bn capital investment plan to 2025, "indeed much of this is now contracted. Furthermore, the quality of SSE’s net zero aligned assets and pipeline means there is considerable potential for future growth above and beyond this," it said.
SSE announced earlier this month it had teamed up with Norway's Equinor to jointly develop a 900-MW gas-fired power plant in Scotland equipped with carbon capture technology. The pair want to build a similar station in north England as well as a hydrogen-fuelled power plant.