SSE Energy Solutions has agreed to sell a 25% minority stake in its electricity transmission network business, SSEN Transmission, to Ontario Teachers’ Pension Plan Board for £1.465 billion.
The announcement follows SSE’s statement last November, revealing its intention to extend its partnering approach – which saw success through the sale of minority stakes in SSE Renewables’ electricity distribution and transmission network assets – across its businesses as part of the company’s Net Zero Acceleration Programme.
SSEN Transmission will play a “central role” in SSE unlocking renewable resources in the north of Scotland and transporting low carbon power to demand centres south, bolstering the UK’s energy security, the company said.
The transaction for the 25% stake is expected to see a total of £1,465 million in cash proceeds at completion, based on the effective economic date of 31 March 2022.
Proceeds released by this sale will support SSEN Transmission for future growth opportunities whilst ensuring that an attractive balance of capital allocation is maintained across the Group.
This stake sale is aimed to allow the majority stakeholder to maintain control over operating and managing the business, whilst Ontario Teachers will be proportionally represented on the board of directors at SSEN Transmission.
The success of this transaction, SSE said, “reflects both the current value and significant growth potential of SSEN Transmission as one of Europe’s fastest growing transmission networks.”
“As we set out in our Net Zero Acceleration Programme last year, due to the scale of potential growth and the associated investment required across SSE’s businesses, including in electricity networks, bringing in minority partners will balance capital allocation and support further growth, creating greater long-term value for all our stakeholders,” said finance director at SSE, Gregor Alexander.
“In Ontario Teachers’ we have a strong long-term partner who we have worked with successfully over the past 18 years and, whilst we will retain operational control, they will be critical to SSEN Transmission’s ongoing future success.”
Last week SSE also announced it had invested £1.7 billion to support UK energy security and sustainability.
SSEN Transmission is forecast to deliver a gross Regulatory Asset Value (RAV) of £6.5-£7 billion by 2026 through a combination of its RIIO-T2 baseline investment case of circa £2.6 billion and further expected investments through Ofgem’s Uncertainty Mechanisms. Subject to projects progressing successfully through planning and regulations, SSE forecasts that SSEN Transmission’s gross RAV will surpass £12 billion by 2031.
To support the ongoing capital expenditure investment programme required for SSEN Transmission to deliver its significant growth plans, a new £750 million revolving credit facility has been put in place to support future long term funding requirements, as well as the working capital of SSEN Transmission.
SSE also expects Ofgem’s Accelerated Strategic Transmission Investment framework later this year and the Electricity System Operator’s Holistic Network Design Follow Up Exercise – expected to be published this year and spring next year respectively – to support SSEN Transmission’s gross RAV growth.
