SSE’s latest financial results have sent ripples through the energy sector, revealing a 25% drop in operating profit for the first quarter of 2025, amounting to £1,962m. This figure, while lower than the previous year, includes exceptional charges totalling £309.7m, primarily due to a £249.5m non-cash impairment of the Group’s investment in the Southern Europe Renewables pipeline. This impairment is a stark reminder of the sector-wide challenges in permitting and grid connections, which have slowed down the build-out of renewable projects.
The company’s directors have also revised their five-year investment expectations, reducing them by £3bn to around £17.5bn. This adjustment reflects a strategic shift towards financial discipline in response to the changing macroeconomic environment and the phased consent process in networks. Approximately 60% of this investment is expected to be directed towards regulated networks, with around 30% allocated to renewables. This reallocation underscores SSE’s commitment to a balanced portfolio that can withstand market uncertainties.
Despite these challenges, SSE’s construction of the Dogger Bank offshore wind farm is progressing on schedule, with Phase A expected to be completed in the second half of 2025. Additionally, SSE secured victories in the UK’s sixth Contract for Difference auction (AR6) and Ireland’s fourth Renewable Electricity Support Scheme auction (RESS 4), winning contracts for the 130MW Cloiche onshore wind farm and the 60MW Drumnahough onshore wind farm Joint Venture, respectively.
Alistair Phillips-Davies, SSE’s chief executive, emphasised the company’s resilience and strategic focus. “SSE continues to prove the benefits of a portfolio that is built to withstand risk and uncertainty and a strategy that is focused on creating sustainable value,” he stated. Phillips-Davies highlighted the company’s ability to meet its financial goals for the year and adapt its investment plans to reflect the evolving energy landscape. He also expressed confidence in SSE’s future, citing the company’s strong balance sheet, increased proportion of index-linked revenue, and the opportunity to contribute to future energy systems built on renewables, networks, and flexibility.
This news is likely to spark debate within the energy sector. The significant impairment in the Southern Europe Renewables pipeline serves as a cautionary tale about the challenges of scaling renewable projects in regions with regulatory hurdles. It also raises questions about the pace of the energy transition and the need for streamlined permitting processes to accelerate the build-out of renewable infrastructure.
SSE’s strategic pivot towards networks and financial discipline could set a new trend in the sector, as other energy companies may follow suit to navigate the current macroeconomic environment. The company’s success in securing contracts in recent auctions demonstrates the continued viability of renewable energy projects, despite the challenges. However, the reduced investment expectations may raise concerns about the pace of the energy transition and the need for increased investment to meet climate goals.
As the energy sector continues to evolve, SSE’s approach to balancing risk, uncertainty, and sustainable value creation will be closely watched. The company’s confidence in its FY27 target of 175-200p earnings per share and sustainable growth to 2030 and beyond is a bold statement that could shape the sector’s trajectory in the coming years. The energy sector is at a crossroads, and SSE’s strategic moves may well influence the path forward.