SSE: Building the AI-ready UK power grid

SSE plc plans to invest about £27 billion of its £33 billion programme in regulated UK electricity networks by 2030, expanding and strengthening grid capacity exactly as data centres, AI workloads and electrification drive sustained load growth. This combination of regulated asset base expansion and structurally rising demand offers visible earnings growth with downside protection from the regulatory framework.

Roughly 20% of the plan, around £6 billion, will go into renewables and flexible generation, while a £2 billion equity raise plus cash flow, debt and asset sales fully fund the programme and remove overhang on the balance sheet and growth path. That clarity on funding has already improved sentiment and gives investors confidence that growth will not rely on repeated dilutive raises.

Utilities and infrastructure investors are rotating towards grid and system operators with scale, visible capex pipelines and exposure to decarbonisation, not pure merchant generators. SSE's shift to become one of the fastest-growing electricity network operators globally positions it well to capture this capital flow and potential valuation rerating.

• Policy support for domestic energy: Long-term UK and Scottish net zero targets, plus pressure to cut reliance on imported gas, are likely to sustain supportive policy and funding for grid expansion and renewables, reinforcing SSE’s central role and extending its visible investment runway beyond 2030.

• RIIO-3 final decisions: Ofgem’s final RIIO-3 determinations for transmission and distribution, due before April 2026, will set allowed returns on much of the £27 billion network plan and heavily influence valuation, sentiment, and capex pace.

Renewables and flexible capacity: Completion of key renewables and flexible generation projects, including offshore wind and peaking plants, will add earnings diversity and firm capacity, positioning SSE as a go-to partner for data centres and large power users needing reliable, low-carbon power.

AI and electrification demand wave: Structural growth in UK electricity demand from AI data centres, electric vehicles and heat pumps could more than double system load by 2050, increasing grid utilisation and making SSE’s long-life network assets more valuable over time.

SSE plc relies on UK regulators to set its allowed returns on the £27 billion of planned network investment, and draft RIIO-3 proposals signal pressure on cost allowances and equity returns. Tougher decisions would slow earnings growth, squeeze cash flow, and cut the upside from this capex cycle.

Delivering £33 billion of projects by 2029/30 across transmission, distribution, renewables and flexible generation is operationally complex, with rising labour and material costs and permitting constraints. Delays or overruns would erode project returns, defer earnings, and risk negative regulatory or political scrutiny.

The £2 billion equity raise adds around 9–10% to the share count, with more capital also coming from debt and asset sales. If growth or returns disappoint, investors could focus on dilution, SSE's lower dividend yield versus peers, and the risk that much of the rerating has already been priced in.