SSE cuts clean energy investment over planning, policy delays

Image Credit: SSE

One of the UK’s leading energy developers, SSE, is scaling back its investment plans in new renewable projects, significantly reducing the government’s ambitious 2030 clean energy targets. The company revealed it would slash its five-year capital expenditure by £3 billion, bringing the total down to £17.5 billion—a move that casts serious doubts on its ability to meet renewable goals by the decade’s end.

A hefty £1.5 billion reduction will come from renewable energy projects, including offshore wind farms and a high-profile hydropower development. Another £1.5 billion cut affects spending on other energy infrastructure and transmission projects. SSE’s outgoing CEO, Alistair Phillips-Davies, pointed to “policy and planning delays” alongside a “changing macroeconomic environment” as the key drivers behind the decision. These challenges have renewed concerns about whether the UK can achieve its clean power ambitions.

Two flagship Scottish renewable projects have been notably delayed. The Coire Glas hydropower scheme in the Highlands and the Berwick Bank offshore wind farm—submitted for governmental approval in late 2022—have faced prolonged uncertainty. Once operational, these projects could supply electricity to roughly 9 million UK homes. SSE’s second phase of the Arklow Bank offshore wind farm off Ireland’s coast has also encountered setbacks.

The UK government has set a bold target to double onshore wind capacity, triple solar power, and quadruple offshore wind by 2030, aiming for a power grid that is 95% free from fossil fuels. SSE was expected to be a cornerstone in reaching these goals, projecting a fivefold increase in renewable energy generation to 50 terawatt hours (TWh) by 2030. The company’s renewable output surged 18% last year, hitting 13.3 TWh as of March.

By pulling back from new renewable investments, SSE plans to prioritize more stable ventures like high-voltage power cables and local electricity distribution networks, sectors known for predictable, regulated returns. This strategic shift is reflected in the company’s adjusted profits, which dipped 3% to £2.14 billion for the fiscal year.

In his final remarks before stepping down later this year, Phillips-Davies reaffirmed SSE’s commitment to offshore wind development in UK waters, highlighting a daily investment rate of £8 million. He stressed the urgent need for stable market conditions and reduced risk to sustain these ambitions. “While the market needs reform, it does not need zonal [pricing],” he said.

“We’ve seen a whole swathe of the industry – all the main developers – come out firmly against zonal. It adds a whole lot of uncertainty and tens of billions of pounds to the cost of getting to net zero by 2030. It also introduces – tragically – a potential postcode lottery on people’s bills,” he said.