SSE H1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
November 13, 2024

There are 11 speakers on the call.

Operator

Good morning, and welcome to our interim results presentation. Before we begin, let me first address today's announcement that I intend to retire from SSE during 2025 after 11 years leading the company. It's been an immense privilege to be SSE's Chief Executive, and I am extremely proud of what we have achieved during my time here. However, I believe the time is right for the Board to begin the search for a successor, and I'm fully committed to delivering a smooth handover that maintains momentum on our significant growth plans. Our Chair, Sir John Manzoni, will lead the appointment process, taking account of our highly capable internal team and the wider market, and we'll update you in due course.

Operator

In the meantime, I, along with the rest of the executive team, remain fully focused on delivering our strategy. I'm joined this morning by Barry O'Regan, our Chief Financial Officer and Martin Tidworth, our Chief Commercial Officer. And as you will hear shortly, there's plenty to be getting on with as we make the most of the significant opportunities in front of us. We'd be delighted to take your questions after we present what has been a strong start to the year as we continue to drive high quality sustainable earnings across the group. I'll start with our number one priority, safety.

Operator

I'm pleased to say we've seen a significant reduction in both the number of injuries and the total recordable injury rate compared with the same period last year. In April 2024, we opened an industry leading immersive safety center where actors bring the reality of a safety incident to life for our employees and contractors. We've already put over 6,000 employees and partners through this program and hope this investment will continue to have a real world impact in ensuring everyone working for SSE gets home safely. You've heard me speak before about the mission critical role SSE has in the clean energy transition in our core markets, markets that are increasingly attractive. Decarbonization and electrification are 2 defining structural trends.

Operator

And while climate targets have slipped in some parts of the world and the implications of a new U. S. Administration are yet to be seen, the deployment of clean power in our home markets is accelerating. We are uniquely placed to benefit with 1 of the best clean energy portfolios in the world, spanning renewables, flexibility and electricity networks. These are the key enablers of net 0 and energy security more broadly.

Operator

Our balanced business mix provides multiple short growth options in offshore and onshore wind, hydro, carbon capture, batteries, transmission and distribution. This mix also provides deep resilience, enabling us to generate value through a variety of market conditions as we've seen in recent years. And these tailwinds are strengthening. In the UK, our biggest market, the government has put delivery of clean power in an accelerated timescale at the heart of its growth agenda. Already in the 1st few months of the Parliament, we've seen the new government taking bold steps at a noticeably faster pace as it seeks to put its 2,030 Clean Power mission into action.

Operator

Whether it's spending, speeding up the outdated planning system for our electricity infrastructure in Scotland or long overdue support for long duration storage projects like Corry Glass, the policy landscape is already more supportive than it was at our full year results in May. And the NESO has now handed over to government its detailed priorities for successful pathways to clean power by 2,030. They point to the pace of strategic investment that will be required for economic growth. Whichever way you look at it, SSE is ideally placed to deliver a significant proportion of any 2,030 Clean Power Plan. But it isn't just a U.

Operator

K. Story. As other countries intensify their focus on clean energy, there'll be opportunities in other geographies across the EU and Japan where we have a growing presence. So whether at home or abroad, SSE is a business with the right strategy, in the right markets, at the right time, with a once in a generation opportunity before us. We're now at the midpoint of our 5 year fully funded investment plan that will see us target around £20,000,000,000 in CapEx investment to drive long term earnings growth.

Operator

The Net Acceleration Programme Plus or ENZAP Plus is supported by world class assets and pipelines, balance sheet strength, capital discipline and highly capable teams. This is essentially a clean power plan. And as you'll hear throughout this presentation, we're making significant progress on delivering it. It gives us a clear pathway to deliver strong and increasingly high quality growth, which includes increasing adjusted EPS to between £175 to 200p by 2027. So in summary, this is a company at the heart of the clean energy transition that is delivering investment in world class assets, creating sustainable value for shareholders and society, a carefully balanced business mix that provides deep resilience and multiple growth options and a highly disciplined approach to investment with an ever increasing organic pipeline of projects that offer long term value creation.

Operator

Whether your eyes on today, this decade or beyond, SSE is well placed, well balanced and fit for the future. I'll now hand you over to Barry.

Speaker 1

Thank you, Alastair, and good morning, everyone. I'll now take you through what was a strong start to the financial year before touching on our continued confidence in the long term financial outlook. In the first half, the group delivered adjusted operating profit of £860,000,000 24% higher than the prior year. I'll step through the business by business movements shortly, but first I want to highlight the changes in earnings mix coming through the results today. As you may have noticed in May, the higher contribution from our Networks businesses this year has not only increased the predictability of results, but also reduced the level of seasonality in Group profitability.

Speaker 1

And this upweighted contribution, combined with an improvement in renewables performance that reflects weather conditions and year on year capacity increases, meant that these businesses delivered twice the total operating profit they did in the prior period. Meanwhile, these same weather conditions contributed to more stable markets, which saw the thermal business make a small loss in the first half. This is a strong group performance that shows the benefits of our business mix and the value from our investments starting to come true. Turning to that investment, our continued focus on networks and renewables meant around 90% of the £1,300,000,000 invested in the period was in these businesses and their delivery of high quality earnings. Overall, the Group delivered adjusted EPS of 49.8p, in line with our expectations for the period.

Speaker 1

Turning to SSCN Transmissions performance, adjusted operating profit decreased by 27% to £157,000,000 Despite growing investments and therefore underlying revenue allowances, the year on year reduction includes a one off timing effect after the business benefited from full expensing accelerated capital allowances in the prior period. In addition to this economically neutral timing effect, the cost of transmission's workforce continues to grow in preparation for the major investment program Alacer will cover later, and depreciation has increased as the asset base expands. SSCN distributions operating profit was up 188 percent year on year to GBP346,000,000 As we have flagged before and in line with our guidance for the business for the full financial year, this is because allowed revenues include a multiyear cost inflation catch up. This follows a sustained period of high inflation rates, which were not reflected in tariffs, which are set 15 months before the start of the financial year. In renewables, we were delighted to announce that Viking reached full commercial operations in August.

Speaker 1

When combined with a full contribution from Seagreen Wind Farm and our Salisbury Battery facility, the business finished period with over 1 gigawatt of additional installed capacity when compared to the same 6 months last year. And after adverse weather in the previous summer, the period saw a return to favorable conditions, which output increasing across wind and hydro. Combined with the increase in hedge prices, these factors meant that SSE Renewables operating profit increased by 2 87% year on year to £336,000,000 As we highlighted in May, we fully expected that thermal and gas storage operating profits will be significantly lower than the prior year, reflecting market prices and assumed normal volatility. The favorable weather conditions shown on the previous slide for renewables also contributed to the more stable market conditions over the summer, meaning that flexible thermal generation was not required to the same extent as in previous years. Turning to gas storage, the business continues to make a seasonal loss, which is expected to revert back to profitability for the full financial year.

Speaker 1

With already contracted increases in capacity market payments not due to start for another 18 months, the market environment outlined above drove a combined operating loss for these businesses of £44,000,000 for the half year. In our customers business, we are continuing to see supply margins return to more sustainable levels. In electricity, with competitive and responsible pricing in place, we have been implementing tariff decreases whilst continuing to support vulnerable customers. And while Business Energy was affected by lower volumes, the decrease in customer tariffs across the businesses also contributed to lower levels of bad debt provisions required. With customers' needs and expectations evolving rapidly, combined with an increasing market requirement for low carbon power supply solutions, the importance of this business as a route to market for renewable generation will only increase.

Speaker 1

And turning very briefly to our other businesses. I would highlight that we have commenced a reorganization of SSE Enterprise, which will see existing activities integrated into other business units for a simpler group organizational structure that provides an enhanced platform for growth. Below the line, net finance charges rose reflecting the interest on Seagreen project financing, while the fall in tax rate was driven by the full expensing capital allowance relief available on our investment program. As we have guided to previously, we expect the benefit from full expensing to increase in line with our CapEx delivery and our current tax rate to continue to fall to an average of 12% over our 5 year plan. Dividends continue to be an important part of delivering value to our investors.

Speaker 1

And in line with the plan set out 18 months ago, we today declared an interim dividend of 21.2p reflecting an increase of 6% on the prior year. And we will make the recommendation for the final dividend in May alongside publication of full year results. Our commitments to delivering on the FY 'twenty seven dividend plan remains, as we target dividend growth of between 5% to 10% per annum, whilst also restricting earnings dilution from the scrip option. The strength and stability of SSE's capital structure has been a significant part of the Group's delivery in recent years, as it has navigated volatile commodity prices, increased collateral requirements and higher interest rates. Looking forward, it is this same strength and stability that will enable the Group to increase investment in high quality, long term infrastructure required for the energy transition.

Speaker 1

And that increased investment has meant that adjusted net debt rose to GBP 9,800,000,000 at September 24, with 94% held at fixed rates. The successful issuance by SSEN Transmission of €850,000,000 each year green bond in August 24 at an attractive fixed rate

Speaker 2

has

Speaker 1

solidified SSE's status as the largest corporate issuer of green bonds in the UK. And we have replaced our existing credit facilities with enhanced sustainability linked facilities that will run to the end of the decade and provide a good liquidity base. There is a lot of detail on this slide, but ultimately not much has changed since May. We have seen the stronger performance from networks and renewables come through the results presentation today in line with our expectations of better performance. And whilst the weather conditions meant flexible thermal generation was not required to the same extent during the first half of the year, we still expect the business to benefit over the key winter months and deliver around £200,000,000 of profits.

Speaker 1

Looking out over the medium term to FY 'twenty seven, the progress made to date on our investment plan means we continue to have confidence in the long term earnings projections for our businesses. As ever, final performance for FY 'twenty five will be dependent upon market conditions, plant availability and the weather over the second half of the financial year. And therefore, consistent with the approach we have taken in the past, we will look to give specific EPS guidance later in the financial year. Finally, I wanted to return to the value creation we see out to FY 'twenty seven. We are now halfway through the 5 year investment plan.

Speaker 1

And with around 80% of CapEx either delivered or committed, we are seeing the benefits of that capacity additions and regulatory asset growth that are a core part of that plan. And with ever increasing investment each year, we're expecting to deliver around £20,000,000,000 of CapEx by 2027 as we progress through the plan. Whilst phasing of spend may mean we don't hit this number exactly, that does not affect our confidence in achieving our earnings targets. Crucially, we have already locked in and are delivering on the key projects that will deliver our FY 'twenty seven earnings guidance. And we have done so through the selective progression of organic projects with a highly disciplined commitment to hurdle rates.

Speaker 1

This ensures delivery of attractive risk adjusted returns over any volume targets. And it is this commitment to disciplined investment that drives our confidence in achieving not only our 175p to 200p guidance, but also a higher quality of earnings for the group. This is high quality value creation that we expect to be delivering for years to come. I'll now pass you over to Martin to talk through operational performance for the Energy businesses.

Speaker 2

Thank you, Barry. As Alastair said earlier, accelerated clean power targets are making our markets increasingly attractive for investments. Whilst energy markets have settled at lower levels than those we experienced during the last few years, gas prices remain historically strong, peak spark spreads are positive and the capacity mechanism is increasing over time. Our portfolio of businesses is designed to react to changes in the price environment. High wind speeds are obviously good for onshore and offshore assets.

Speaker 2

But when the wind doesn't blow, our hydro and growing battery flexibility protects renewables from overexposure to pricing events and our thermal fleet is able to dispatch in line with the positive pricing dynamics. Our FY 'twenty seven earnings guidance is based upon a long term assumed power price for unhedged renewables that is consistently tracking below the GB baseload price. This is despite historically low spark spreads and a dislocated U. K. Carbon price impacting the future market value assessments.

Speaker 2

Both could offer upside to our price scenario. Our guidance is also underpinned by a rising capacity mechanism price in GB and Ireland, but it is also based upon a measured assessment of the option value of assets that offer market flexibility. Finally, we are continuing to lock in future value through our hedging activities and with almost half of our hedge position through gas equivalents, we would expect the outturn prices to be significantly higher once Spark, carbon and traded option values are factored in. Our hedge books therefore offer a guide to an income floor rather than a locked in energy value. And it really is worth reemphasizing the risk management quality of our energy book.

Speaker 2

No other UK competitor has day to day hedging and trading optionality at every price point in the merit order. This offers a level of protection and assurance to the exposures of the group that allows us to trade in additional value and supports our confidence. A key aspect of this is relentlessly converting our project pipeline to deliver high quality sustainable earnings growth. In Renewables, our delivery record has led to a 45% increase in output year on year as projects come through and generate. At Seagreen, Scotland's largest offshore wind farm, the asset is performing exceptionally well in its 1st full year of operations.

Speaker 2

In Hydrate, the plant at TUMUL has been repowered and its generation potential increased with the biggest overhaul in its 91 year history and we are carrying out other improvement works across the fleet. And we've deployed our first battery projects at Salisbury with work currently ongoing on our 320 Megawatt battery project at Monk Freeston, which is the largest of its kind in the UK under construction. We continue to create future value too. We were successful in the North Sea with Aymud and Veyr where we are looking towards financial close towards the end of 2025. In AR6 with Cloyers Onshore Wind Farm and in RES 4 with Drummer How.

Speaker 2

As ever, financial discipline remains paramount and we will only pursue opportunities domestically and internationally where they meet the bar we have set on returns. Our focus on quality of earnings means that by 2027, around 50% of our renewables output will ultimately be contracted, providing reliable recurring income and optimizing our level of market exposure. Completion of Viking Wind Farm over the summer on time and on budget represents a major milestone for us to see whilst demonstrating our ability to deliver across a number of businesses. We took the financial investment decision on a merchant revenue basis before locking in value through 2 15 year CFD auctions, which achieved an average of £67 per megawatt hour in today's prices. First conceived more than 20 years ago, Viking will continue to create societal and commercial value for decades, as well as leaving a legacy of enabling Shetland to access the UK grid.

Speaker 2

Viking is just one of any number of examples of SSE showcasing its skills across energy markets in terms of commercial optimization, regulatory engagements, engineering solutions and environmental standards whilst managing multi supplier relationships to deliver complex, highly technical projects. Seagreen offers evidence of the same, likewise, QB2 or Slough Multifuel. And of course, SSCN Transmission's pioneering HVD C link to Shetland, which Alastair will talk about shortly. The point is that in all of these projects, the group took a long term approach, applied strategic insight and brought together a blend of commercial, engineering and development skills to create long term value. In a similar way, Dogger Bank will be a world class asset with excellent long term prospects.

Speaker 2

As is often the case with first of a kind technologies being deployed on this scale, it too has faced challenges, particularly related to the issues with the Haliade X turbines and the remedial actions required by manufacturer GE Venova. We are continuing to make progress on installing and commissioning at Dogger Bank A. And as I speak, the vessel is out on-site preparing to start installation of the 32nd turbine. Improvements are starting to come through and we will seek to make up lost ground where possible as we target completion in the second half of twenty twenty five. For their part, GE have revised their operational procedures and quality assurance thresholds, whilst introducing additional controls to ensure the long term performance of turbines installed and commissioned.

Speaker 2

In parallel, work continues apace on Dogger Bank B and C. We already have most of the monopile and transition pieces in place on B and are well underway in procuring a second turbine installation vessel. Importantly, even with this delay and second vessel, we continue to expect our equity returns across all three phases will be comfortably above our hurdle rates. And as we have learned over many years of building major infrastructure projects, it's important to take a long term view. Dogger Bank will be the world's largest offshore wind farm, able to power around 6,000,000 homes with an operational life in the region of 35 years.

Speaker 2

It will create real value for decades to come whilst building deep supply chain relationships, enhancing expertise and generating further option value through a potential 4th phase at Dogger Bank D. With 5 gigawatts of renewables capacity already installed and around 2.5 gigawatts under construction, the bulk of our 9 gigawatt FY 'twenty seven target is well underway. And we have been clear throughout the execution of our plan that our focus is on value over volume with clear hurdle rates that need to be met before we take an investment decision. Building out with discipline may mean that it takes longer to take projects into construction, particularly given the turbulence of the last few years. However, with a portfolio of high quality options, we believe this is the right approach to delivering value.

Speaker 2

And as Barry highlighted in May, we do not need to take FID on the 1.5 gigawatt balance to reach our FY 'twenty seven earnings target. We believe our growing 17 gigawatts of diverse early and late stage options will be required under every scenario in the future energy system with major projects like Barrick Bank and Corie Glass capable of making a vital contribution once policy and planning hurdles are overcome. Our projects are unique in their scale, but sites like our pump storage options offer market responsiveness qualities that we and indeed the Nissan its recommendations to governments believe to be strategically critical. Geographically, our primary focus remains GB and Ireland, but we continue to make progress internationally with projects under construction in Hibera, Chantrix and Puglia, taking our Southern European portfolio of in construction sites to over 100 megawatts. With recent auction successes in the Netherlands and with auctions ahead in Japan, we will continue to selectively grow our international pipeline where it makes strong financial sense to do so.

Speaker 2

The critical role that flexible thermal generation will play in supporting security of supply in the future energy system is becoming better understood. Policymakers are recognizing the pressing need to back up a renewables led system and greater value is being placed on availability in a tightening market with our fleets locking in more than GBP 1,000,000,000 of capacity market revenues over the 5 year plan. As demand grows and legacy nuclear sites retire, we expect future capacity mechanism outturns to remain strong and ensure aging CCGTs can extend their asset lives. As with elsewhere in the group, delivery is the key focus within Thermal and the business has operationally performed well with fewer unplanned outages during the period. Strategic milestones have also been met in the first half of the year with completion ahead of time and within budgets of the joint venture 55 Megawatts Slough Multifuel Plant.

Speaker 2

And consent has been granted for 300 megawatts of new build biofuel generation capacity at the Tarbert next generation plant, a project that will contribute to much needed security of supply and an increasingly tight Irish market. Looking further ahead, we remain committed to offering hydrogen and carbon capture and storage generation solutions as the business progresses a 4 gigawatt development pipeline that could deliver clean, flexible assets towards the end of this decade and into the early 2030s. Whilst SSE is primarily focused on the supply of electricity, it is becoming increasingly clear that demand side can not only drive an increased need for our products, but in the form of CPPAs, it can also provide vital reach to markets and underpin new generation investments. In our customers business, we are leveraging the Group's capabilities across the energy value chain to offer increasingly integrated solutions to large corporates across the UK and Ireland. These include more bespoke green contracts, longer duration sales agreements and hybrid offerings that assist end users with their own net zero ambitions.

Speaker 2

We are also continuing to supply energy and efficiency solutions to households in a vertically integrated Irish markets and having supported customers through the worst impacts of the cost of living crisis by foregoing profits, this business is returning to more normal operating conditions. Our customers business will continue to provide an important shopfront option to our wider energy businesses in the years ahead. I'll now hand back to Alastair.

Operator

Thank you, Martin. We'll now turn to our electricity networks businesses. And firstly, SSE and Transmission, which is one of the fastest growing networks businesses in Europe and while we continue to make strong progress on the £20,000,000,000 pathway to 2,030 program. I'll come on to the Shetland link in a moment, but let me start with what is the biggest single transmission project undertaken to date in the UK. Following Ofgem approval for a nominal spend of around £4,300,000,000 ground has been broken on the Eastern Greenlink 2, a project that will eventually provide a 500 kilometer link from the northeast of Scotland to Yorkshire.

Operator

Meanwhile, in Orkney, all major supply chain contracts have been signed for a new high voltage alternating current system. Consent has also been granted to upgrade the Argyle and Kintyre network to 275 kV, is crucial to enabling renewables across the region and ensuring security of supply. The pioneering 260 kilometer Subsea Shetland link shows what can be achieved at pace. The innovative £660,000,000 project was delivered on time and within budget and in conjunction with renewables delivering Viking Wind Farm. On the mainland, it connects to the 1st multi terminal HVDC switching station of its kind in Europe, a technology which will be a core component in the electrification of our economy.

Operator

The experience gained in this project consolidates our industry leading HVDC expertise and sets the business up for growth. We've shown you this slide before, but it is worth repeating. We are already making real progress here and the tailwinds are strengthening. The Transmission's upcoming RIIO T3 plan will be at the heart of it. The blueprint for upgrading and reinforcing the high voltage network in the north of Scotland.

Operator

With much of the work within the upcoming price control already built into our license conditions and with potential for that to increase still further, it is vital that the final supplement supports settlement supports debt and equity investment. In the run up to submission of our business plan next month, we're working with Ofgem to ensure we arrive at a framework that best serves the needs of all stakeholders. Our asks of the regulator are clear and transparent. Firstly, we're looking for Ofgem to aim up from the top end of the cost of equity range published in their methodology decision. Secondly, they should set lower asset lives and capitalization rates that would support cash flows.

Operator

And finally, the overall framework should be consistent with maintaining strong credit ratings. SSCN distribution is 18 months into the delivery of the Rio ED2 price control period, which includes an ambitious capital expenditure program that is growing and modernizing our asset base With major upgrades underway and supply chain locked in across a number of projects, we expect CapEx to continue to increase following a 20% growth in financial year 2024. This acceleration will bring with it improved performance and better customer service as well as increased regulated asset value. In addition to our baseline plan, there is the potential for further upside under the uncertainty mechanisms with over £130,000,000 effectively secured after a total of up to £700,000,000 on offer across the price control period. And while we are growing the network, we are also making it smarter, targeting 5 gigawatts of flexible capacity by the end of RIIO ED2 and earning early rewards for delivering flexibility services under the DSO incentive.

Operator

Looking ahead, future energy scenarios point to a significant role for smart, flexible distribution networks. To do this, we need to build capacity and demand side flexibility. This is a significant growth opportunity for distribution, comparable to what we are seeing play out in transmission now, albeit with different phasing. Distribution has published the first strategic development plans of NEDNO as we seek to ensure the business is well placed to capitalize on a shift from a reactive to proactive regime. In the meantime, we look forward to the upcoming recommendations from the National Infrastructure Commission, which we hope will build on positive signals from the NESO about the need for faster delivery of strategic distribution investment.

Operator

We operate in a highly dynamic sector, but right now it is electricity networks where the race to net 0 is offering the best opportunities. The premium assets SSE has across the transmission and distribution businesses are key to the growing quality and sustainability of the group's earnings profile, providing predictable index linked returns over the long term. SSE's unique position as a key enabler of renewables potential of the North Sea is providing double digit additions to RAV annually over the course of the 5 year plan to financial year 'twenty seven. And this growth is only accelerating. Clean power can only be delivered with modernized electricity networks.

Operator

Accelerated transmission growth is already in the construction and delivery phase and distribution will be next. This morning, we presented the details behind a strong start to the year. Excellent progress up to the halfway point in the ENZAT plus program gives us added confidence in our £175 to £200 adjusted EPS target for financial year 'twenty seven with clear visibility of growth within our Renewables and Electricity Networks plans. Let me sum up with a brief reminder of why SSE is at the heart of the energy transition. The role we will play in the 2,030 clean energy plan presents an unprecedented growth opportunity.

Operator

We've deliberately built a business that is mission critical to the electrification of the economy with world class assets across renewables, flexibility and networks. And we are creating real value through our focus on delivery, the resilience and optionality of our business mix and the combination of underlying balance sheet strength and capital discipline that allows us to pursue growth when and where the value is greatest. This is the right business in the right markets at the right time. Thank you, and we'd be delighted to take your questions now. Over to the operator, please.

Speaker 3

Thank you. And now we're going to take our first question and it comes from the line of Mark Freshney from UBS. Your line is open. Please ask your question.

Speaker 4

Hello. Thank you for taking my questions. Firstly, something you haven't mentioned much in the presentation is just on Berwick Bank, which could be an immensely attractive project and you own 100 percent of it. Planning for the offshore part has been very frustrating. Can you update us on what the issues are and when you might expect resolution and the final consent?

Speaker 4

And my second question is just on ambitions outside of the UK and Ireland. Clearly, you have an option in for an offshore wind farm in the Netherlands. But given sentiment and presumably valuations in Europe and North America are low, how do you think about potentially deploying balance sheet capacity there and exploring opportunities there at potentially a low point in the valuation cycle? Thank you.

Operator

That's great. I'll just touch on the second one and then I'll give Marston a go at both of them. So I think you're right, you've seen valuations come down to more predictable levels and easy levels to digest. We've obviously got a portfolio and a growing portfolio of overseas assets currently. We're very focused on converting those into built assets that can start earning us money.

Operator

But we'll remain vigilant as to what other opportunities are available. I think at the moment, the focus is definitely organic, but we wouldn't rule out M and A where we can see value in Europe. And I think despite the fact we've got a fully funded plan, we do have an enormous array of opportunities in our current markets and with the acquisitions that we've already made, the Siemens Gamesa business in Europe and also the business at Pacifica over in Japan. So I think we've got to be mindful of the fact that they will all require quite a lot of capital over the balance of this decade. But Martin, Beric, anything you want to say on Europe?

Speaker 2

Yes. Well, just to clear your point, obviously, we made our acquisition in Southern Europe a couple of years ago. I mean, maybe that's gone a bit slower than we expected, partly because of grid and consenting issues. It's not unusual, unique to us, but it is a 4.3 gigawatt pipeline that we've just said in the presentation. We see the strategic need for.

Speaker 2

And obviously, if anything, since you made that acquisition, most European countries have increased their renewables ambition and the time scales for that. On Barrick Bank, it's a 4.1 gigawatt wind farm in 3 phases. The Section 36 was consent was submitted 2 years ago, in December 2022. That is with the Scottish consenting authorities. We still await their decision, but we are hopeful that we'll get a determination before the closure of the AR-seven eligibility window.

Operator

Okay. Does that help, Marc?

Speaker 4

Perfect. Thank you very much. Thank you.

Speaker 3

Thank you. Now we're going to take our next question and it comes from the line of Rob Pulleyn from Morgan Stanley. Your line is open. Please ask your question.

Speaker 5

Hi, good morning, everyone, and thanks for taking the questions. I mean, well, the first one, I suppose is well, congrats, Alastair, on the news that you'll be having an easier life. I think you've been a great servant to SSE, and I think it's a shame to see you go sort of at this juncture where things are really starting to accelerate. So I mean the first question on that, we know obviously it's a slightly different message to when Gregor left. So if you could just maybe lift a little bit in terms of what the passengers knew are and in terms of the succession plan and how that pans out?

Speaker 5

And the second one, just to pick up on Dogger Bank, if we could. You're talking about underway in terms of procuring a second installation vessel. Appreciate there's lots of commercial sensitivity, but could you give a bit of a steer as to when all of this could be boxed up and put behind us, given obviously a lot of market focus on this particular project, which is relatively small within the wider portfolio of the SSE story given what's going on in Networks? Thank you very much.

Operator

Fine. I'll let Martin deal with DOGA. Succession, yes, look, I've been at SSE for I've been at SSE for 27 years and over 11 of them now as CEO. I think we're getting to within touching distance of the 27 targets. And I think the key thing for the board and for the company is not only that 27 delivery, but what we do over the balance of the decade and beyond.

Operator

And so I felt now was the right time for the company for me to let the board have the opportunity to basically ensure there was a smooth succession process, give them plenty of notice on that and for them to hopefully supplement the fantastic team that we've got in any way they feel necessary and appoint my successor. So I'm around until sometime later in 2025. I remain very focused with the rest of the executive team on delivering that strategy and delivering 2027. And we'll let Sir John and Korn Ferry go through the process that they need to. We'll run a full and transparent process to make sure that we get the best talent possible.

Operator

And in the meantime, we'll carry on, and I'll make sure there's a smooth transition as and when the board decide what the best course is going forward. But look, yes, pasture is new, yes, I suppose that one came up on CNBC this morning. So I'm not intending leaving the workforce. I hope to contribute a bit to the productivity of the U. K.

Operator

Going forward, but no idea what that is. And I'll just remain very focused with the team on doing what I need to. And then, Dolger?

Speaker 2

Yes. Morning, Rob. Just very briefly, we're in advanced discussions on the second vessel, and we hope to conclude those shortly.

Speaker 5

Okay. Thanks, guys. I will turn it over.

Speaker 3

Thank you. Thank you. Now we'll go to our next question. And it comes to the line of Peter Bisztyga from Bank of America. Your line is open.

Speaker 3

Please ask your question.

Speaker 6

Yes, good morning and thank you. And also congratulations and wishes to Alastair from my side. I wanted to focus a little bit more on Deutsche Bank, if I may. So firstly, following on from Rob's question on the installation vessel, we've seen vessel rates increase significantly. Erstad had to do another impairment recently on the higher rates.

Speaker 6

I know you're not going to sort of comment specifically on this, but can you at least reassure us that when you say returns are comfortably above hurdle rates, that comment factors in the high vessel costs that you anticipate? And also, can you talk a little bit about what the knock on effects of the delay that you've had at Dogger Bank will be on the timeline of Dogger B and C? So I'm just wondering how much of that delay can you sort of claw back with those kind of future projects? And then maybe just one final point. On the time line in process from GE, the Nova's perspective, are you completely comfortable there?

Speaker 6

Or is there any risk of issues there that could further impact your project time line?

Operator

Sure. Okay. Barry is going to run you through the returns, but obviously, we'll have taken account of all the evidence and issues that are there. And I don't think you can assume that vessel rates are necessarily higher than we might have expected or otherwise. So I just wouldn't I'd just be careful about making assertions or assumptions, Ben.

Operator

But Barry, if you run through assumptions, Martin will fill in.

Speaker 1

Yes. Thanks, Peter. Yes, look, as you'd expect, we've been around the model in quite a bit of detail and we've baked in what we consider to be the reasonable cost in that. I think standing back, clearly, there is an impact on returns because of the delays. But what we've said is that is still comfortably above our hurdle rates.

Speaker 1

I know there's a few reasons in that. We've spoken before about the higher inflation coming through in the CFD and the low fixed interest rates coming through as well. But also, as project delivery moves to the right, so does the timing of our equity injection, is it a project, also move to the right. We've also have project contingencies we've mentioned before. Clearly, we're now going through them.

Speaker 1

There's obviously, in a standard contract like that, there will be liquidated damages there as well, which I'm not going to get into the detail on that. And then also, the longer the commissioning period goes on for it means you're delaying the start of triggering the CFD rate. So, those turbines that are in that pre commissioning period are getting the higher merchant power price. So, you put all that together and we're comfortable that we are comfortably above the our offshore hurdle rate with delivery in the second half of twenty twenty five.

Operator

And just anything on GE? Yes.

Speaker 2

So I think firstly, you asked about Dogger Bank B and Dogger Bank C timescale. So we've always said each project will follow a year after. That still remains the guidance. So therefore, Dogger Bank B second half of 'twenty six, Dogger Bank C second half of 'twenty seven. In terms of GE, I mean, it's probably fair to say we have very detailed and consistent meetings with senior project management.

Speaker 2

We have weekly performance and planning reviews with them. We think those are going quite well. They share their detailed plans and we discuss those. I've also had meetings with the CEO. So we have very good relationships and very good contact in terms of how the project is going.

Speaker 2

And obviously, there have been some issues. But as we said in our presentation, the revised operational quality assurance thresholds have slowed down installation, but that is all factored into our second half of next year guidance for Dogger Bank A.

Speaker 6

A. Excellent. Very clear. Thank you. Thank

Operator

you.

Speaker 3

Thank you. Now we're going to take our next question. And it comes from the line of Deepa Venkastel Desvarajan from Bernstein. Your line is open. Please ask your question.

Speaker 7

Thank you so much and I'm still wishing you a more relaxed retired life start with. I have 2 questions. Sorry to labor about Dogger Bank, but it's a clarification to some of the answers you provided. And the second one was on Rio. Let me start with Rio.

Speaker 7

So I've seen that you very explicitly now outline an expectation of more than 10% nominal equity return in RIIO3. I believe this is new and in the past you've not sort of done that. So could you sort of explain I mean this implies that you do expect some outperformance. So maybe if you could just walk us through the bridge of how much is the allowed returns plus outperformance and your inflation assumption in that 10%. And on Dogger Bank, just to be clear and to clarify, you've got this vessel contracted till the end of 2026, but seemingly DurbaBank C will go on to second half of 'twenty seven.

Speaker 7

So is the expectation that this second vessel is what would enable you to, A, accelerate your build out rate for A, B, C and then also help you cover the last leg of Torquebank C? And I think with Geevanova for one of the other projects, they have provided for some vessel contingency costs for the other project. I was wondering whether they would be pitching for some of these extra vessel costs, which are partially because of the quality problems and issues with their commissioning installation.

Operator

Okay. If we start with Dogger and then probably myself and Barry both have a go at the 10% of that, I've got a simple view. Barry might have a more complex and detailed view.

Speaker 2

So just on vessels deeper, good morning, by the way. So we'd expect clearly as the 2nd vessel arrives some overlap with the existing vessel. And obviously in our plans that we've just talked about and our delivery plans, there is an assumption about how those vessels operate and install through the period. So yes, that second vessel will be there obviously for Dogger Bank C.

Operator

So could

Speaker 3

you

Operator

I think in terms of going through all the plans we have and all the knowledge that we have about what's going on, I don't think we see material differences in the rates going forward. And I think at the moment, we would also say B and C in terms of returns will be above our hurdle rate. So I think that's kind of where we are. So we're clear on timing. We're clear on hurdle rates.

Operator

I think if we start going into individual assumptions, you'll decide that one is positive and one is negative and all the rest. And without going through 100 of them, which is obviously what we do and why we have specialist teams, it's very difficult. I think you've just got to accept that the returns we see as being reasonable and we've got a current time frame and sort of speculating on where we are with individual providers and everything else. If there's anything material, which was material to our earnings, we would definitely put it out there. We'll let you know.

Operator

Okay. Just on that well, on the Rio 10%, at my simple level, we've just been clear with the regulator and government that if they want investability in the transmission network, they need to be looking at a 10% nominal rate. That is what is required in the international markets if you're going to get transmission assets away in terms of that level of investment. And you end up with a 6% to 7% cost of equity, 2% or 3% on inflation and maybe 1% on outperformance in some way. And you can cut it in various ways, but ultimately, you need to be aiming at that kind of level for that kind of and that's all I've said about it publicly.

Operator

But Barry?

Speaker 1

Yes. Look, I think that's the key point. Look, we're focused on the overall framework, Deepa. So it's obviously the cost of equity and there's the cash measures as well that Alastair talked about earlier on. And look, yes, so the cost of equity, it's a real number.

Speaker 1

Cost of equity is a real number that's in the Ofgem methodology, clearly, you need that inflation. And then there's incentives and outperformance on top of that. But look, we're in detailed discussions with Ofgem at the moment. So I don't think you'd expect us to give any more specifics around at this stage, but it is part of that overall framework that we're very much focused on.

Speaker 7

All right. Thank you.

Operator

Thank you.

Speaker 3

Now we're going to take our next question. And the question comes from the line of Harry Wybert from BNP Paribas Exane. Your line is open. Please ask the question.

Speaker 6

Hi, good morning, everyone. Thanks for taking my questions and congrats and best wishes to Alastair. First question, actually on one of the comments you made, Alastair, being touching distance on the 20 27 target. So it's been a little while since you've done that Capital Markets Day style update and a lot has changed since you'd offset your 20 27 guidance range. So that sort of piqued my interest.

Speaker 6

But do you think you're going to do another strategic update in the near term and before your departure, Alastair? And I just wondered if there'd be a send off here and if you feel like you're in good shape versus 2027 targets, could that be an opportunity perhaps to bring something positive to the markets on fishing there? That'd be interesting your thoughts. And then secondly, we have the press on a tie up with EDP. I guess there's a limit to what you're going to be prepared to say on this, but you mentioned you might be interested in sort of opportunistic bolt on renewable deals earlier.

Speaker 6

So institutionally of SSE, would you consider a transformational deal or tie up? Or is this just normal course press speculation? Thank you.

Operator

Okay. On an update, I think we'll provide an update whenever we think is appropriate. I don't think it should have anything to do with my timing or any other timing for that matter. We have a fully funded plan out to 2027 currently, and we're working hard to make sure we deliver that. And also, as I've indicated clearly, we've got our eyes on what we don't need to do out to 2,030 and beyond.

Operator

And at the right time, we'll do whatever we need to do around capital markets updates and things of that nature. But look, there's a fully funded plan there and there's a lot of focus on delivery and we're delighted with the strong results we've had in the first half. Press speculation, we just don't really comment on it. I don't think there's anything more we can say on that. More generally on our aspect, I think we're always looking to create value institutionally.

Operator

There's a good deal to be done, we'll do it. And we've I suppose the most recent one, Triton, was a very good deal for us. And we continue to look at assets as they come along. We've got a fantastic growth pipeline. We've got a lot to do to go and deliver that over the period out to sort of 2,030, let's say, just because I suppose that's roughly when the government's around and that's their Clean Power Plan.

Operator

And we remain very focused on that organic plan. But as we've demonstrated in the past with SGRE, Pacifico, Triton, if there are assets out there that we think are attractive and give us the right opportunity to grow, then we'll take that opportunity.

Speaker 6

Okay. Thank you.

Speaker 3

Thank you. Now we're going to take our next question. And the question comes from the line of James Brandt from Deutsche Bank. Your line is open. Please ask your question.

Speaker 8

Hi, good morning, everyone, and also congratulations, Alastair, and thank you for your long serving leadership. I have three questions, if that's okay. Firstly, on the dividend, you obviously grew the dividend by 6% at the half year, which is obviously a kind of interesting marker in OEIC, it's the 1st period after the rebasing. And it's at the kind of low end of the 5% to 10% targeted range. So I was just wondering whether you could kind of talk through what your thinking is there, why 6% is the right number?

Speaker 8

And if there's any kind of criteria you would use to assess whether you would be at the low end or the high end of the range? Second question is on emissions trading. I was wondering whether you could just share your insights because obviously we still have quite a low U. K. Carbon price.

Speaker 8

We obviously have a new government. I haven't heard Ed Miliband talk very much about emissions trading, but maybe I've missed it, maybe he has. But I was just wondering whether you have any insights in what the new government was thinking about emissions trading, whether you thought that they would kind of tighten the scheme up. We could see high carbon prices at some point in the U. K.

Speaker 8

Given how ambitious the decarbonization agenda is. And then thirdly, just if there's any update on power market reform in terms of timing or any kind of messages you're getting from the government and obviously particularly around the idea of kind of localized pricing, that would be great. Thank you very much.

Operator

Perfect. I'll let Barry start on Divvy and Martin will pick up the other 2.

Speaker 1

Yes. Look, thanks, James. So look, on the dividends, look, we obviously have an established dividend policy of growing by 5% to 10% per annum to FY 'twenty seven. And in terms of the criteria, we reflect on it needs to be sustainable, based on sustainable earnings performance, but more importantly, enabling us to fund our very attractive long term growth prospects. So we've set the interim dividend accordingly.

Speaker 1

But I think the important point here is there's been no decision will be made on the full year dividend until we have the full year results, and we'll come back to that in May.

Speaker 2

Okay. Good morning. So yes, I mean, firstly, on location and marginal pricing, probably don't have any more kind of color on timing than you already have, but we expect Desnez to make kind of policy recommendations in perhaps the spring of next year. And obviously, we'll watch that closely. Just for completeness, our position clearly hasn't changed.

Speaker 2

We think location marginal pricing would be off putting or damaging for investment at a point when clearly a clean power 2,030 plan is encouraging the opposite. And we're not alone in that view from developers or generators either. And we particularly believe given the progress that's being made on networks build and also I should add the progress that's been made on policy in terms of cap and floor for long duration storage and perhaps some of the medium term need for this goes away as these assets get built. And that is a position that's, as I say, it's not unique in the market. Then in terms of carbon, you're right, clearly the delta between UK carbon and EU carbon remains high.

Speaker 2

I think we've said in the past that we expect over time that to narrow. Again, that opinion hasn't really changed. We haven't also haven't heard the government talk too much about that. But clearly, there's a few policy things in the background that may kind of accelerate that conversation, including how C bands work, etcetera, and how they impact UK and European carbon markets. So we continue to watch that very closely.

Speaker 8

Interesting. Thank you.

Operator

Thank you.

Speaker 3

Thank you. Now we're going to take our next question. And the question comes from the line of Dominik Nash from Barclays. Your line is open. Please ask your question.

Speaker 9

Good morning. And I'll reiterate what

Speaker 6

the previous

Speaker 9

Analyst has said about best wishes to you, Alastair, on the announcement. A few questions from me. It's probably sort of 2, probably 3, so apologies for that. But they're all linked. And it's all about, I guess, firstly, sort of the Dunkle flauter or however you want to pronounce it, that we're kind of currently seeing and linked to the sort of NISO sort of Clean Power 2,030 targets.

Speaker 9

So just put in context, clearly, the balancing costs are very high in the UK, I think about £11 a megawatt hour on average. And there's a significant sort of push to build more renewables. So the quick is there a risk, first of all, you're putting the cart before the horse? And then the questions that come out of this is, when do you see balancing costs or the economic sort of rent that your thermal power picks up and you're balancing and you're peaking pumped hydro pick up? When you see this peaking, is it going to be sort of 2,030?

Speaker 9

Is it going to be keeps on rising if it peaks at all? The second thing is when you build your new wind farms, also curtailment levels are you now putting through in your base case, which is clearly going to be part of that sort of balancing one? And then sort of the final question, so probably for this, which is on the other side of the equation, there's a benefit, your CCTTs in particular. Have you I mean, you've seen the presentation that you've got plans for decarbonizing by 2,030. What do you need to do?

Speaker 9

What future proof they've got and what the costs involved on getting the CCTs ready to take advantage of this sort of volatile world we're moving into? Thank you.

Operator

Okay. No, a pretty good set of questions there. Just because I covered the networks bit, I think one of the key things on constraint costs is to make sure that we build the networks so we can get the power from where it is available to come from, I. E, the renewables resources and or wherever you site low carbon flexible to the demand centers. So build of networks is critical, which is what's been talked about generally.

Operator

And obviously, you can see a lot of that coming through, particularly in transmission and starting to come through to some extent distribution. But otherwise, I think flexing competing curtailment levels in wind farms and CCGTs. Yes, that's

Speaker 2

quite a lot. Good morning, Dominic. So I mean, yes, again, just for context, I mean, clearly, the Clean Power Plan had an enormous amount of renewable investment assumptions in there, offshore wind going up to somewhere between 43 50 gigawatts and onshore wind effectively doubling. And there was also in there an assumption of 35 gigawatts of CCGTs providing a 5% load factor. So I guess that implies that by 2,030, there is still information rent available for CCGTs on the market.

Speaker 2

And certainly, as the system is looking to balance all of that, we'd expect the need for our CCTs to still be there. Just wrapping in your third question slightly into that, you asked about what do we need to keep our CCTGs available and reliable. We are well engineered on our CCTGs. Our reliability, I think, is market leading and our legacy fleet has been performing very well. We mentioned that in our presentation.

Speaker 2

And we continue to invest in making sure those are very good engineering solutions that are reliable and can come on at short notice and hit what National Grid might need. So I don't see that changing. Obviously, the capacity mechanism and the way that works is important to remunerating the cost of providing that high level of quality engineering. But obviously we mentioned in our presentation, we also believe long term capacity mechanism prices should stay strong for that reason. And then on constraint levels and balancing costs, and obviously, we're not going to tell you completely what's in the model, but obviously, we are aware of balancing costs in the UK.

Speaker 2

And we have always said that as much as a wind fleet might be exposed to intermittency costs, that is why you need flexible generation, including not just the thermal, but pump storage and flex hydro and indeed increasingly for us batteries behind that to balance that off. And so that is the risk management quality of the book we talk about and how we'd see that the thing around.

Operator

Sorry, Anthony. So the last one was CCGT, but sort of particular phase.

Speaker 2

I think I've dealt with

Operator

that on the Yes. Yes. No, that's fine. Dominic, comfortable with the big demand?

Speaker 9

Yes. I'm probably a bit of a rebel, but what was the curtailment? I think you asked what do you think your curtailment sort of modeled in is in your wins at the moment?

Speaker 2

So what I was saying on that is, obviously, you see, Casal, we don't we won't obviously disclose that, but we see the balancing issues on wind, we would argue, as a very good risk management book is moderated or netted off by the flexibility we have on the other side. And part of our build on batteries is to increase the value of that protection.

Speaker 9

Okay. Thank you. Thank you.

Speaker 3

Thank you. Now we're going to take our next question. And the question comes from the line of Charles Schwabbe from HSBC. Your line is open. Please ask your question.

Speaker 9

Hi, good morning there and thank you very much for taking my question. I have 2. 1 first on thermal. You seem to be a little less confident on delivering above the €200,000,000 this year. I was wondering if that takes into consideration the poor wind conditions we had over October November?

Speaker 9

And then the second one on Offshore. I was wondering if you

Speaker 6

could just update us on

Speaker 9

the plan for Seagreen 1A in the U. K. And our Clovin Islands in terms of if you think Seagreen will be available for the next AR auction or any thoughts on how to get these to market? Thanks.

Operator

Okay. Yes, sure. Do you want to have a thermal forecast?

Speaker 1

Yes, yes, Charles. Thank you. Yes, look, we said in May we expected thermal to deliver greater than CHF 200,000,000 in a low volatile scenario. But really, what we've seen over the 1st 6 months of the year was extremely low volatility and low running in our Thermal division. So reflecting that, we feel it's more sensible now to say that would be around the CHF 200,000,000 mark.

Speaker 1

Now that's not to say clearly that, that can change. Clearly, Thermal can respond very quickly to market conditions, it's very much based on what we saw over the 1st 6 months and how we performed over that period.

Speaker 2

Yes. And then just on your question. So firstly, on Arklo, so we are we continue to work on exploring CPPA solutions for route to market for Arklay. And obviously, we've got our we're looking for our secure our final consent. And then all being well with point 2, again, the long term policy backdrop, which is highly constructive for offshore wind in Ireland.

Speaker 2

And we still think Arklay should be a lead project. And then I think the other question for Seagreen 1A, which yes, in theory could qualify into AR7, but that will be a decision for Seagreen.

Speaker 8

Great. Thank you very much.

Speaker 3

Thank you. And now we're going to take our last question for today. And it comes from the line of Ahmed Farman from Jefferies. Your line is open. Please ask your question.

Speaker 10

Yes, thank you for taking my question. Firstly, as your messages from my side as well in the future, maybe as I wanted to start with you, Could you give us a little bit of your perspective on the work you're doing or the work you've done to secure supply chains for the delivery of your electricity transmission plan? And what sort of visibility you have or you're working to get both on pricing and volume? Maybe a second question on the Thermal business. I know you sort of made comments around the €200,000,000 But I just was wondering if you could give us a little bit of an update on what you're seeing currently in the market and into the winter in terms of the spark spread, in terms of electricity demand?

Speaker 10

Give us a sense of the balance of risk around the thermal business outlook. Thank you.

Operator

Yes, sure. Okay. So I think the critical things on Transmission and we will be putting our business plan out in around a month or so, just under a month from now for the next review period, which will run from April 26 through to March 31. You've probably seen that we've put out the Astia and Lotte projects. There was a slide in the pack on that that I called out, having shown that before with the 11 projects.

Operator

We have procured those projects in the sense of having locked in all the major components of the supply chain so we can deliver them. We haven't locked down all of the costs, and that's partially because not all of them have received full planning consent, and so there may still be some alterations to them. But we obviously have where we've got all the consents and have started moving forward, for instance, with Eastern Greenlink 2 that again we called out. We have pinned down the costs and we have essentially agreed those and gone through consultation with Ofgem on those. So I think all costs are not pinned down because that's subject to some tendering, but we have actually pinned down the supply of all the key components, HVDC cables and things of that nature.

Operator

There are some aspects of probably the underlying spend, repairs and maintenance, testing, monitoring, things like that. The sort of certain spend that we might have that we will have a very good view on going forward. And in a normal process of a price control, we'll also have to take a view because we'll have to commit to Ofgem on those certain items that we know what the costs are going to be. And then there'll be another part of it, which is the uncertain stuff, which is some of what you see coming out of the NISO plan and what we anticipate coming out of the extended NISO plan into the 2030s. Well, we haven't locked all that down yet.

Operator

I think we have good relationships with suppliers in respect of that, and we obviously have a good track record and good frameworks. And I think we're ahead of a lot of people. I would say tenants in Europe were probably ahead of anybody else in procuring certainly some of the big HVDC. But after that, I think our procurement is advanced as anybody else within Europe and certainly anybody within the UK. So there's a very, very big slug of what you'll end up with in that business plan that we have locked down, but there still are some significant uncertainties in there.

Operator

And we can obviously talk a bit more about that when we come out with that business plan in a month or so's time.

Speaker 2

And then just on spark spreads and thermal. I mean, obviously, the summer is very high renewables. We've obviously reported that in our results of positive for renewables, but was pretty benign in terms of volatility in spark spreads for thermal. Obviously, we've seen a different set of circumstances emerge over the last 2 to 3 weeks where I believe we've seen the 2nd and third highest daily spark spreads over the last 2 years being set in the markets. And indeed, our thermal fleet has been running at much higher load factors as a result over the last 2 or 3 weeks and indeed is running right now.

Speaker 2

That's obviously a set of conditions, which I think Dominic referred to as Donker Flutter earlier. And therefore, right now, the market isn't necessarily pricing that in going forward. So we still see Q1 peak Spark spreads at around GBP 10, which is probably about the number I was talking about in the summer.

Operator

Okay. Does that cover it, Ahmad?

Speaker 10

Yes. Thank you.

Operator

Okay. That's great. Thank you. Operator, any more questions?

Speaker 3

There are no further questions. I would now like to hand the conference over to the management team for any closing remarks.

Operator

Okay. That's great. All right. Thank you all for your questions, and thanks to our moderator. Before we go, I'd like to leave you with a few closing thoughts.

Operator

We're very pleased with the interim results presented today, but we see them as part of a much bigger strategic picture. Our main focus is on further EPS growth at the full year, and we'll update you on our expectations in due course. In the meantime, it's back to the task of growing the business and delivering on the investment plan that is behind our confidence in the financial year 'twenty seven adjusted EPS target of £175 to £200. I believe that the company is extremely well positioned to thrive as a race to clean power in 2,030 gathers pace. And my success will benefit from the support of a hugely talented, diverse and dedicated senior leadership team when that time comes.

Operator

So thanks again. We look forward to speaking to many of you in the weeks to come.

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Earnings Conference Call
SSE H1 2025
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