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SSE has agreed to sell a 25% stake in its electricity transmission business, SSEN Transmission, to Ontario Teachers’ Pension Plan Board for £1,465 million.
The deal, which is expected to be completed shortly, is intended unlock capital to allow the group to invest £12.5 billion in low-carbon infrastructure in the UK and Ireland by 2026 as part of its Net Zero Acceleration Programme.
The programme also includes the sale of a minority stake in group’s electricity distribution business, SSEN Distribution, which is expected to commence in early 2023.
SSE said its investments in Great Britain alone could exceed £24 billion this decade, with the group delivering around 20% of the new offshore wind generation and electricity network capacity needed by 2030.
The company said the agreed sale reflects both the current value of SSEN Transmission and its significant growth potential, given its central role in transporting power from new renewable generation in the north of Scotland down to demand centres in the south of the UK.
SSEN Transmission had a regulatory asset value (RAV) of £4,155 million as of 31 March 2022, along with net debts and debt-like items of £2,488 million, including £780 million of shareholder loans. SSE said these shareholder loans are expected to remain place and be replaced with external debt as they mature.
It said SSEN Transmission’s baseline investment under its RIIO T2 business plans of around £2.6 billion, along with further investments unlocked through uncertainty mechanism, are expected to raise its gross RAV to £6.5-£7 billion by 2026. Subject to regulatory and planning approval, SSE expects this figure to exceed £12 billion by 2031.
Following the transaction, SSE’s finance director Gregor Alexander will become chair of the new board, whilst Rob McDonald will continue in his role as managing director of SSEN Transmission.
“With the north of Scotland home to the UK’s greatest resources of renewable electricity, we have a critical role to play in helping deliver the UK and Scottish governments net zero commitments,” said McDonald.
“Our investments will also be key to securing the UK’s future energy independence through enabling the deployment of homegrown, affordable, low carbon power.
“With significant growth forecast in transmission, bringing in Ontario Teachers’ as a minority stake partner will help fund our ambitious investment plans as we continue to deliver a network for net zero emissions across the north of Scotland.”
Charles Thomazi, head of EMEA infrastructure and natural resources at Ontario Teachers’ Pension Plan Board, said: “SSEN Transmission is one of Europe’s fastest growing transmission networks. Its network stretches across some of the most challenging terrain in Scotland – from the North Sea and across the Highlands – to deliver safe, reliable, renewable energy to demand centres across the UK.
“We’re delighted to partner again with SSE and are committed to supporting the growth of its network and the vital role it plays in the UK’s green energy revolution.”
To help cover the future long term funding and working capital of requirements of SSEN Transmission, SSE has also put in place a new £750 million revolving credit facility.
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