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SSE boss rules out stock market listing for renewables unit

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SSE boss rules out stock market listing for renewables unit

British utility SSE PLC has no plans to pursue a separate stock market listing for its renewables division, which has emerged as a major player in the U.K's offshore wind sector and one of the company's key growth areas, CEO and Executive Director Alistair Phillips-Davies said.

SSE recently consolidated its existing wind and hydropower assets and development and operations businesses in a new company, SSE Renewables, in order to leverage the unit's growth outlook to help raise more investment.

"Significant global reductions in the cost of deployment make renewable energy the primary route to driving low-carbon electricity in much of the world and a key part of our growth story," Phillips-Davies said on a call with analysts on May 22 to discuss SSE's full-year earnings.

Asked about the new unit's future, Phillips-Davies said that although a separate listing was not on the table at the moment, SSE would continue to seek partners for individual projects and "particular aspects of what we do in that business," implying a continuing strategy of selling off minority stakes to outside investors.

SSE Renewables runs hydropower plants and wind parks on land and at sea, and has one of the largest offshore wind pipelines in the U.K. with around 7 GW. The company's total renewables capacity is now just over 4 GW and it expects to spend most of its £1.5 billion in planned investment over the next year on green energy as well as transmission and distribution networks.

Martin Pibworth, SSE's wholesale director, said the company was also seeing rising interest from corporations looking to procure renewable energy because rising carbon prices under the EU's cap-and-trade scheme were making it more appealing for large consumers to lock in long-term electricity contracts at current rates.

Although SSE has not signed any corporate power purchase agreements, or PPAs, for onshore wind plants yet, he indicated that it might decide to enter the market soon. "We are aware of potential corporate PPAs that are entering the market, and we've probably seen an increase in interest...I see that as a positive trend and one that we expect to continue," Pibworth said.

SSE saw its adjusted operating profit, excluding one-off events, fall by 27% in the financial year that ended in March, as it was negatively impacted by the suspension of the U.K.'s capacity market for power generators, losses in its trading division and poor weather conditions for renewable generation.

The company's retail arm, which is listed as discontinued operations and not included in the overall result, also suffered due to rising wholesale costs and a price cap for household energy bills that has weighed on other suppliers as well. SSE is still trying to find a new owner for the unit or list it separately by the second half of 2020 after a planned merger with one of its rivals fell through at the last minute.

On a reported basis, SSE saw profits increase in the last financial year on the back of a large number of asset sales, including three onshore wind farms and a stake in its telecoms network.