Utility SSE is to consolidate a new renewables division that will lead its drive to become a leading player in green energy.
SSE Renewables will manage the company’s 4GW of UK and Ireland assets in onshore and offshore wind as well as hydro and pumped storage.
Current generation managing director Jim Smith has been appointed as managing director designate of the newly-formed company and will report to wholesale director Martin Pibworth.
Smith will “lead the work being done to prepare for the formation of the new entity, which is expected to be largely complete by the end of the current financial year”.
SSE Renewables will remain focused on core markets of the UK and Ireland but is “expected to result in the creation of more opportunities in different markets”, the utility said.
“SSE has begun the process of early assessment of potential opportunities.”
The company also expects the creation of the renewables division to lead to five opportunities, including a streamlined focus on developing, operating and owning renewables assets via an experienced management team and skilled employees.
SSE believes it will have “enhanced” ability to raise finance and may also be better position to enter into strategic and financial partnerships and joint ventures.
Other opportunities include extending “core competencies in renewable energy to other technologies and geographies” and greater visibility for investors.
SSE chief executive Alistair Phillips-Davies said: “The creation of SSE Renewable is the latest step in our strategic goal to give greater focus to renewable energy, give investors greater visibility of assets and earnings in the future and give each of the businesses in SSE the best platform for success.
“Success will mean maximising SSE’s contribution to the ongoing decarbonisation of the electricity system and creating value for shareholders and society in a sustainable way, with a clear focus on maximising future growth opportunities.”
He added that SSE has a unique portfolio of renewable energy assets and a valuable pipeline of future opportunities.
“The creation of SSE Renewables will build on SSE’s established skills in asset management and large capital project development and put the business in a strong position to evolve and succeed in a rapidly-changing electricity sector.”
The company also posted its results for the first six months of the 2018/2019 financial year.
SSE renewables output decreased in the first half of the year, despite an increase in capacity. Output was 3.2 terrawatt-hours in the period, down from 3.5TWh last year.
The main reason was relatively dry and still weather that resulted in lower than expected wind speeds and hydro production.
Onshore output was 1686 gigawatt-hours this financial year, compared with 1755GWh last year.
Onshore wind capacity is now 1915MW, with a further 800MW in the pipeline of which 525MW has been consented.
SSE said it may try to increase this capacity to accommodate more advanced turbine technology.
Offshore wind output in the period was 441GWh, up slightly on last year which saw 437GWh produced.
Overall, SSE made a loss before tax of over £265m in the first half of the 2018/2019 financial year, compared with a profit of more than £409m in the same period last year.
One of the reasons was a £497.4m reported operating loss in the company’s wholesale division, which had made a profit of £169.1m in the first six months of the 2017/2018 financial year.
A £332.9m profit in the network business helped offset the wholesale losses, but the overall operating loss stood at £165.3m.
SSE said the reason for the poor operating figures was the impact of decisions to mitigate commodity price risk through the management of its energy portfolio.
“Since September, significant action has been taken to limit future exposures in this financial year and into the next,” it added.
SSE chairman Richard Gillingwater said: “Although our half-year results are slightly ahead of the position we set out in September, they fall well short of what we hoped to achieve at the start of the year. This is disappointing and regrettable, but important changes are now being made to the way SSE manages its exposure to energy commodities.
“The commercial terms of the proposed combination of SSE Energy Services and npower are the subject of ongoing discussions, and creating a new independent energy supplier remains our objective. The board believes that the best future for SSE Energy Services, including its customers and employees, lies outside the SSE group.
“Looking ahead, we are taking forward the strategy we set out in May to position SSE as a leading energy company in a low carbon world, with a focus on regulated networks and renewables, complemented by flexible thermal generation and business energy sales. Material progress is being achieved in these businesses, which make up most of the value in SSE.
“This is a company with a clear strategy for its core businesses and highly valuable assets in a sector that’s yielding investment opportunities that go with the grain of political, economic and environmental focus on decarbonisation, and it is this that will support the delivery of our dividend plan in the years to come.”