SSE Aktie

Good morning, and welcome to today's presentation. I'm pleased to share my first full year results as SSE's Chief Executive, and I'm joined today by Barry O'regan, our Chief Financial Officer. Protecting the people who work for us is always our top priority. So let me start with a few words on safety performance. We met our overriding safety goal of no life-changing injuries and our combined total recordable injury rate has remained similar year-on-year. Over the last 5 years, we've seen a doubling of contractor hours worked as investment accelerates. However, injury rates have remained flat across that time.

We believe this has been meaningfully aided by our industry-leading immersive training program in which around 14,000 people have now taken part. As our construction program continues to grow, investments in building and maintaining a strong safety culture will be more important than ever. We'll be delighted to take your questions on our results. But first, we'll briefly talk through the progress we've made this year and the momentum that is building behind our GBP 33 billion investment plan. We undoubtedly operate in markets with huge complexity, volatility and change. Since I joined the Board in 2017, we have now seen 4 large price events driven by interplays of geopolitics, asset failure, a global pandemic and extreme meteorology. Through all of them, our portfolio resilience has been evident, and we've adapted to the circumstances that have emerged, and so it is today.

The conflict in the Middle East has once again put energy back at the top of the global news agenda. In response, governments are looking to strengthen energy independence and protect consumers from price volatility. Accelerating electrification and building homegrown infrastructure will not only bolster energy security and reduce exposure to fossil fuel imports, but also cut bills and support economic growth. Our strategy, backed by the efficient operation of our existing assets delivers on all of these fronts.

In networks, we are carrying out the biggest upgrade to Britain's electricity system in decades, which will drive economic growth and unlock the benefits of affordable clean energy for consumers. In renewables, we are delivering projects that will increase homegrown energy capacity at scale, systematically reducing future exposure to commodity volatility. And we are providing dispatchable flexibility services, which are critical to ensuring security of supply and enabling faster decarbonization. Investments across these 3 pillars is the best way to build true energy independence and through lowering reliance on gas, delivering sustainably lower bills for customers in the long run. Consumers are already starting to see tangible benefits from our investments with the system operator confirming that our transmission business delivered almost GBP 300 million of savings for consumers in the last year alone.

In short, there is increasing impetus behind the drive to electrification with the strategic and system value of networks, renewables and flexibility becoming increasingly clear. As governments push to go further and faster in the pursuit of national energy security and affordable bills, our business has resilience today and promises growth for decades to come. It's important to set out why our unique combination of networks, renewables and flexibility provides resilient growth across the range of future energy scenarios. We focus our operations in countries with robust policy frameworks and have a high level of regulatory certainty underpinning our investments. We have a diverse and premium asset mix with accelerated delivery of networks complemented by disciplined renewables additions and highly efficient flexible generation.

Our pipeline contains optionality across the value chain, whether in networks growth throughout the 2030s or the over 20 gigawatts of generation potential. Investment into this unique mix is driving increasing levels of index-linked earnings, which are set to grow to around 80% by 2030, providing increased security in a volatile environment. We benefit from balance sheet strength. 90% of our debt is held at fixed rates with long tenures, backed by strong investment-grade credit ratings. And our relentless focus on delivery shows up in our highly attractive total shareholder return as we sustainably grow earnings and capital. This is a growth business in a growth sector built on strong resilient foundations that will create sustainable value no matter the political, regulatory or macroeconomic environment.

In November, we translated an extraordinary investment opportunity into a clear 5-year growth agenda. And whilst we have premium options across the group, the single biggest opportunity right now is in transmission, which is at the heart of our fully funded GBP 33 billion plan. With the right people, systems and supply chain in place, we are already delivering on the plan and are poised to scale it up. 80% of our investment is in regulated networks and delivers a compound annual growth rate of around 25%. This makes SSE one of the fastest-growing electricity network companies in the world. With continually increasing levels of high-quality index-linked earnings, we have clear visibility to our target of 225 pence to 250 pence earnings per share by 2030.

Following the November equity raise and today's FY '26 earnings announcement, this is equivalent to a 10% to 13% annual growth rate in earnings, which together with our progressive dividend approach will continue to deliver a highly attractive TSR. The resounding support from investors when we announced the plan was clear. And as delivery accelerates, our excitement continues to grow. This is not just a plan on paper. It is being delivered on the ground, asset by asset as development becomes construction and as construction becomes operation.

3/4 of transmission consents are now approved and the remainder are progressing through their respective processes. We have delivered an 80% increase in transmission investment year-on-year with construction now underway on 5 mega projects in the north of Scotland. With the supply chain secured, pricing risks managed, the right resourcing and experience to draw on and the price control agreed, we remain confident of delivering this transformational investments. Our distribution network is preparing for the first step in a multi-decade growth opportunity to enable widespread electrification with our ED3 business plan submission later this year. In renewables, we are pleased with the ramp-up in turbine installation on Dogger Bank and also Berwick Bank CfD success.

And in flexibility, we continue to play our part in supporting security of supply in our home markets with around 1 gigawatt of critical dispatchable capacity additions underway between new flexible generation at Tarbert and Platin and across our battery portfolio. Recent macro events have underlined the resilience of the group, and our exciting story is one of long-term structural growth being realized through the delivery of our investment plan. We are building critical national infrastructure necessary for energy independence, climate action and sustainably lower bills. And in doing so, we are creating value for shareholders and society.

I'll now hand over to Barry before coming back to the business review.

Thank you, Martin, and good morning, everyone. I will now take you through the financial performance of the group in a year where we delivered on our financial targets and significantly upweighted our growth ambition with a bold investment plan that is set to deliver for decades to come. As expected, FY '26 earnings were lower than the prior year, reflecting the expected impact of lower distribution earnings and the dilution from our November equity raise. This did not stop us delivering on the commitments we made for the year with 153.5 pence earnings per share, which is towards the top end of our full year guidance. Our networks investment program has accelerated during the year, and you can see that pace through a record annual CapEx of GBP 3.6 billion delivered for the group.

This investment is feeding directly into compounding growth in the regulatory asset base, driving high-quality underlying earnings, 60% of which were index-linked this year. And given the high-quality underlying returns achieved and our confidence in the outlook driven by investment across networks and renewables, we are recommending a 7% increase in dividends for the year, in line with our progressive dividend policy. I'll focus first on results for Networks. Our combined transmission and distribution businesses delivered investments and adjusted operating profit in line with expectations.

The continuing step-up in transmission investment is already beginning to come through earnings in the price control mechanic. Transmission CapEx is up 80%, reflecting accelerating progress being made across the 5 major projects under construction. And while distribution earnings fell significantly year-on-year, this was expected and is principally due to the prior year benefiting from inflationary catch-ups. Capital investment in these businesses has been particularly strong, around a 60% increase in prior year, delivering more than 20% increase in RAV, which will provide the foundation for sustainable earnings growth in future years. Taken as a whole, our Networks business have delivered very strong financial and strategic performance in the year.

Moving now to the Renewables business. Whilst wind conditions overall have been broadly in line with long-term averages, we have seen mixed conditions during the course of the year, particularly in quarter-to-quarter hydro variability in addition to the lower expected year-on-year hedging prices. Despite these challenges, the business has seen a strong year with adjusted operating profit increasing to an all-time high as new capacity additions continue to come online. And it was encouraging to see that in addition to the new contributions from Dogger Bank and Yellow River wind farms, asset availability remained consistently strong across the portfolio, supporting overall performance.

Overall, this business has made strong progress on its construction plan while maintaining value over volume discipline on our development pipeline. In Flexibility, earnings from our conventional thermal generation and gas storage businesses were slightly lower than prior year, reflecting various outages across the fleet and the prevailing market environment. Spark spreads have continued to be relatively low, while seasonal spreads remain disappointing for the Gas Storage business despite market volatility.

However, both flexible generation and gas storage continue to respond well to energy crisis on behalf of consumers, underlining the need for these assets to reduce system risk and provide long-term security of supply. In Energy Customer Solutions, we have seen lower earnings as expected, mainly due to lower wind revenues and supply volumes. We continue to invest in this area to extend our range of product options and help drive wider growth opportunities for the group. And finally, our Energy Markets business remains central to managing market volatility, mitigating risk and maximizing value for the group, demonstrated by an increase in profits this year. Ensuring that we maintain a well-run business continues to be a priority, and we have made good progress in delivering our efficiency program.

We have focused on aligning the group behind the transformational investment plan we announced in November, which has included necessary resourcing decisions. Enabling, harnessing and deploying new technologies and innovations are a key focus and are being prioritized through this process as accelerators for the energy transition. We are also enhancing our culture and strengthening management for a faster-paced, more commercially minded organization that is best placed to capitalize on future growth opportunities being created.

Collectively, these efficiency measures are expected to deliver over GBP 100 million of savings during FY '27, and will reach over GBP 200 million in recurring savings by the end of FY '28 when the full benefits of the program have been realized. Looking at earnings and dividends. Net finance costs decreased during the year as increased construction activity and the GBP 2 billion equity raise more than offset a slightly higher cost of debt. As expected, this higher construction activity is also driving our tax rate lower through an increase in capital allowances. And finally, the timing of coupon payments on newly issued hybrid capital meant that hybrid charges were flat year-on-year.

Turning to the balance sheet. Our strong cash flows and the proceeds from the November equity raise meant that our adjusted net debt and hybrids were flat on prior year despite the record investment delivered. Leverage was also stable at 3.3x net debt to EBITDA, well within the thresholds of our strong investment-grade ratings, which have recently been reaffirmed by the rating agencies. 92% of our debt has been secured at a fixed rate, providing protection against inflation at an average cost of debt around 4.1%. And we have increased levels of liquidity with around GBP 7.4 billion available at year-end, which will cover our net financial commitments for the next 17 months. Ultimately, we remain committed to maintaining a strong balance sheet and our investment plan has a range of funding levers, including asset rotation options across the portfolio that will mainly be delivered towards the end of the plan, in line with the capital investment.

As Martin mentioned at the start, the conflict in the Middle East means we enter FY '27 against the backdrop of a volatile macro environment. And whilst we continue to monitor developments, we do not currently anticipate any immediate change to our projections for the group's performance for FY '27. This is a testament to not only the strength of our growth plans, but also the resilience of our business. Our underlying FY '27 earnings expectations remain unchanged since they were first announced in May 2023, having been adjusted to 168 pence to 193 pence following the share issuance in November.

Our assumptions are based on the strength and clarity of opportunities immediately ahead of us and our emphasis on capital discipline and operational efficiency. We benefit from inflation protection mechanisms built into our core businesses, contracted supply chain and a hedging approach that reduces our exposures to commodity market variables. We expect significantly higher profitability in transmission over the coming financial year as investment continues to accelerate. While in distribution, we expect similar levels of profitability as FY '26. For Renewables, we expect the continued capacity additions will deliver increased output that will offset lower forward prices.

And in Flexibility, we have already secured an increase in capacity payments for the year, providing a solid foundation for earnings growth. Looking further forward to FY '30, our earnings expectations of between 225 pence to 250 pence also remain unchanged, and the slide outlines some of the earnings drivers. Central to that outlook are the regulated networks businesses, receiving around 80% of our investment and providing a stable underpin for the majority of earnings and asset growth. I'll close by reiterating we have continued to deliver strong operational performance throughout the year, resulting in a good set of results towards the top end of our expectations.

I'll now hand back to Martin for the business review.

Thank you, Barry. Our Transmission business represents one of the fastest-growing networks globally, and we're seeing that coming through with the 80% increase in investment this year. Ofgem's strategic approach to regulation has provided unprecedented and welcome visibility on investment to 2030 via the ASTI and LOTI programs. We now have an investable and deliverable RIIO-T3 settlement and with supply chain secured and resources and skilled people in place, we have real momentum. Significant planning progress has been made, too, with around 75% of our consents granted and decisions expected on outstanding 9 within the next 12 months. Spades are in the ground with 5 major projects now fully consented in construction and progressing well. But with the continued push towards electrification, the need for further investment in large-scale transmission infrastructure does not end here.

We are currently working with the system operator to identify and progress further onshore reinforcements and subsea links for delivery during the next decade with NIO's report expected in the summer. Any infrastructure program of this scale must be highly sensitive to the views of the communities hosting it, which is why we undertook one of the largest public consultation exercises Scotland has ever seen. Based on community feedback, we have recited substations and altered routes while also providing new community benefit funding projected to be over GBP 100 million alongside supporting the delivery of 1,000 new homes.

This is a lasting and meaningful legacy for the North of Scotland. In terms of the capital program, the pathway to 2030 major projects, 6 onshore and 5 offshore continue to make good progress. 9 consents remain outstanding with the final marine consent expected towards the end of the summer and 3 overhead lines in public inquiry processes similar to those we have navigated in the past. Of the substation consents, 4 are with the Scottish government on appeal with the fifth to be reheard by the relevant council this summer. Each had support of local planning offices, and we remain optimistic of a successful outcome in all these cases. It is important to note that our plan had assumed a certain amount of delay for challenge and our overall investment we set out in November remains on track.

Construction is also progressing well on the Auckley Link project on Eagle 2, where cable manufacturers started earlier this calendar year, in Argaland Sky and on Spittle Peterhead, where we have awarded our largest ever contract at EUR 2 billion with NKT. And work is not just progressing on these 5 projects. Early construction work is already underway at a number of substation sites across the remaining projects as we ramp up for full delivery. And innovation, whether through new technologies or use of AI is enabling delivery of these projects on the ground.

Our approach to substation delivery is leading the way with modular substations enabling small-scale grid connections at speed. These offer a standardized and repeatable design built in safer and cleaner conditions, reducing costs and disruption for local communities. Likewise, in the Western Isles, we're using drones to install conductors on overhead lines, a U.K. first, which is minimizing our impact on sensitive landscapes while speeding up project delivery. Modular substations, drone technology, autonomous robotics, 24-hour monitoring of critical assets without human intervention. These are just a few examples of how technology and innovation are enabling delivery of our investment plan. Ofgem deserves credit for enabling a regime that has led to construction of these 11 mega projects.

Their progressive approach to anticipated investments has helped us unlock preconstruction and early construction funding. This has enabled us to contract early and strategically with specialist supply chain partners who share our relentless focus on delivery. Mechanisms such as real price effects and price adjustments within the regulatory framework, all support investment confidence and keep costs down over the longer term. All of the strategic equipment required to deliver this transmission investment has been secured, and the names on this slide underline that we have assembled a world-class experienced global supply chain combined with a strong local presence to deliver value in the communities we operate. This is backed by a structured relationship management program using multiparty steering groups to ensure coordination between all parts of the supply chain across the entire construction program.

And our internal capability is significantly enhanced with a considerable increase in our own staffing numbers, increasing more than 20% in this past year and fivefold in the last 5 years. With funding in place, regulatory approvals secured, supply chain contracted, headcount increased, consenting progressing well and construction in train, the grid reinforcement that forms the backbone of our GBP 33 billion investment plan is gathering pace. Our Distribution business continues to make strong progress against its RIIO-ED2 plan. At the same time, we are laying the foundations for ED3 from where we expect to deliver significant investments over the 5 years from 2028 to enable electrification of the economy. This year saw 5 new subsea cables completed, part of our over GBP 1 billion of existing capital delivery agreements across our license areas. Ofgem is assessing nearly GBP 1 billion of additional uncertainty mechanism requests to support network development through the remainder of ED2 and early ED3 mobilization.

Overall customer satisfaction scores are also increasing with improvements also seen in connections, but extreme storms in the north of Scotland have affected customer interruptions and customer minutes loss scores. The business is seeing a ramp-up in delivery, which, when combined with the need for strategic investments for an electrified economy, gives us further confidence in its growth trajectory. We truly have a multi-decade growth opportunity ahead of us in distribution. In preparation for this and the upcoming price control, we are taking cost out of the business and putting it into the systems, tools and processes needed to excel over the long term.

The system operator is making good headway on the regional strategic energy plans needed to underpin the timing and scale of our own local network investment plans. We have seen connections demand more than double since 2024. In Scotland, this is connecting distributed renewables, while in England, our patch covers one of the most data center heavy areas in Europe. The regulator is looking to carry the strategic approach seen in transmission regulation into distribution, but we are not expecting a big bang of investment like that business. Distribution will be a transformational program to electrify the economy over many decades using an optimal combination of network build and smarter, more dynamic flexibility to deliver future growth and ED3 will be a pivotal step towards delivering a local network for the future.

Renewables and systems are the bedrock of future global energy, and we have a world-class business with premium assets and projects that will generate significant long-term value. This year, we have made progress on our major projects, both onshore and offshore. In England, a 150-megawatt Ferrybridge battery entered commercial operations and battery installation is also continuing well at the 320-megawatt Monk Fryston and 150-megawatt Fidlers Ferry projects. In Scotland, we have consent for Berwick Bank and a 20-year CfD for Phase B of the project at a competitive price. The project is now progressing towards a final investment decision, which is anticipated in 2027, and we expect to bid the remaining phases into the accelerated AR8 later this year. In addition, our pumped storage hydro scheme at Corry Glass will find out soon whether it has qualified to the next phase of the government's cap and floor scheme, whilst in Ireland, ARCO is awaiting a consent decision expected later this year.

And our beachheads in international markets offer optionality, which could, on a measured basis, add to growth over the long term. Taken together, we are building out our premium pipeline in a disciplined manner that has served us so well in the past by prioritizing value over volume. We continue to build momentum at Dogger Bank A with turbine installation now complete and commissioning expected to be substantially complete by the end of 2026. Turbine installation and commissioning is progressing strongly at Dogger Bank B with 20 turbines currently installed and first power achieved in short order. The run rate of installations has far exceeded that achieved previously, thanks to a number of improvements based on learnings from the initial stage.

At Dogger Bank C, installation of transition pieces was completed in November 2025, marking successful foundation installation across all 3 phases. When fully complete, this project will produce 6% of the U.K. current demand, making a huge impact on homegrown energy production. And technology is also having a huge impact on the Renewables business. We've been using AI for a number of years now to monitor salmon through our hydro schemes and seabird activity across our remote sites.

That data is being put to good use, supporting faster, more evidence-based permitting and planning for future developments. Commercial operations at our first battery in Ferrybridge was met with the first use of our AI-led asset optimization platform. A similar system has been used by hydro for a number of years now to optimize generation dispatch decisions using AI and machine learning to efficiently react to predictive asset conditions and weather and market price changes.

And the benefits are being seen in the system, in the operational performance and availability of our assets. This is not future potential, but delivery today. Our Thermal business is fully focused on delivering the essential flexibility that renewables-led systems rely upon. We have the U.K. and Ireland's leading conventional thermal fleet alongside a portfolio of options that can provide firm flexible power at different levels of carbon abatement. As the system changes, governments are increasingly valuing capacity as much as electricity.

And whilst we were unable to secure contracts for life extensions through the U.K. capacity mechanism this year, over the past few years, it has created a consistent and reliable revenue stream for these assets. In Ireland, we received a 5-year capacity mechanism agreement for Great Island. Construction is progressing well at both the Tarbert and Platin sites with full commercial operations expected in 2027 and 2028, respectively. Across both core markets, we continue to retain and selectively develop additional options for low-carbon power stations and storage needed for the future system. Taken together, we have high-quality assets, providing much needed capacity for our markets and balance for our business alongside a development pipeline fit for a range of future energy scenarios.

Electricity demand is expected to increase under all those future energy scenarios and data centers will be a driving part of that story. SSE has strategic optionality to support that growth. The U.K. is in the early stages of the data center boom and with the government designating data center growth as a strategic national priority and streamlining the planning and construction process, we expect this will be a trend that is set to accelerate through the rest of the decade. We are already supplying over 80% of Irish data center power demand, creating strong partnerships and relationships in the process. Our customers business is also creating early-stage value through private electricity networks with around 1.6 gigawatts of new network connections under agreement and a pipeline of further opportunities to come. I mentioned earlier that our southern distribution license area is at the center of U.K. data center demand, and we have over 2 gigawatts of contracted applications in that license area alone.

Our geographical advantage does not stop there with strategic land and generation options in emerging growth zones such as Ferrybridge and Keadby as well as new build route-to-market opportunities in Ireland. This is a great growth opportunity, but it is not incorporated in our targets. With our significant experience and key value proposition for hyperscalers, we have the platform to unlock this growth potential over the decade ahead.

So to summarize, these really are exciting times for SSE and those around us. A strategic focus on networks, renewables and flexibility aligns SSE with the electrification trends dominating our core markets. At the same time, the breadth of our options and capability across the value chain gives us growth options wherever future value emerges. Our business mix and capital strength mean we offer a compelling combination of resilience and value for today and structural growth for tomorrow. But the thing that really sets us apart is our GBP 33 billion investment plan and the way it faces into the dominant and important theme of national energy security.

Through it, we are harnessing a massive growth opportunity and making meaningful difference to society as we help deliver a homegrown energy system that offers lower, more stable bills over the years ahead. Most importantly, we have real momentum behind our ambition. Delivery is happening right across the business as we turn plans on paper into infrastructure on the ground and at sea. We are meeting our operational and financial objectives today and fully committing to the ambitious growth targets we have ahead. Barry and I would now be very happy to take any questions.

[Operator Instructions] And our first question today comes from the line of Mark Freshney from UBS.

Just 2 brief questions. Firstly, on the planned auction for legacy renewable assets next year. I mean, clearly, there's the stick of an 80% marginal tax rate at high levels. How will you be trying to shape the regulation around that? Because the worst thing would be if the auction clears at a low price? And how will you particularly protect the value of some of the Scottish hydro that captures super peak prices?

And just secondly, on the impairments of wind farms, onshore wind farms under construction due to the delayed grid connection. Can you talk around that and explain why these impairments are so big? Is it because of higher rates? Or is it because of just the length of delay in getting the grid connection for these 2 assets, which are being impaired?

Thank you, Mark. I'll take the first question, maybe leave Barry for the second question. Look, I mean, firstly, I mean energy transition has been ongoing for, what, 15 years. And there have been multiple consultations and multiple changes to mechanisms to enable markets to evolve in the correct manner. This may be the next stage of that. And of course, we always talk to governments constructively when they're consulting on new ideas. Historically, we have talked about moving rocks to CfDs and the possible advantages that could give to all stakeholders, including critically consumers here.

And of course, you'd expect us to be very well engaged on this. Just in terms of the specifics on the hydro, just remember, hydros are coming off ROC at the end of this financial year. So that might be a slight nuance in your question. Just one other point I'd make as well, if I may. There's obviously a lot of talk about gas price setting power price and trying to decouple that. What we see in the market is that, that effect is reducing materially over time. So we think gas prices set power prices around 60% of the time, and we see that falling quite dramatically over the next few years as companies like us bring on major renewables infrastructure like Dogger Bank.

So effectively, the market is actually delivering that objective just in terms of following the current mechanisms and the current policy evolution. And we'd always be slightly cautious to government saying, do you change your metal with market mechanisms that can create effects that possibly you didn't expect when the market is already delivering some of those outcomes.

And look, in relation to the impairment, these are 2 onshore wind farms in Scotland that had A or 5 CfDs when they took FID and ultimately, just the grid connection dates pushed out on these. And I think, look, reality Mark, many developers in the U.K. have seen this across onshore wind, solar and battery. And look, for us, the impairment really relates to the time, obviously, the project is pushed out and there's also a higher CapEx just while the project gets pushed out like that. It is isolated to these 2 projects for us in terms of our portfolio. And ultimately, look, they are AR, 15-year government-backed contracts including with CPIs are still attractive projects once we get to operations.

And our next question comes from the line of Pavan Mahbuban from JPMorgan.

I'll start with where you sort of rounded off, Martin, on the data center platform and I appreciate you're well positioned in that area. Can you maybe provide some color as to whether you're having any constructive dialogue already with partners? Or are you just indicating that you're just well positioned in terms of those opportunities? That's question one. My second question is on ED3. It would be great to hear a summary of your thoughts of the recent SSMD and what you thought was good and where you think there's areas for further dialogue with Ofgem. And then if I can sneak a quick third one in for you, Barry, when you sold the SSE Energy customer business to OVO, I think there was some financing instruments that were still outstanding. If the E.ON OVO transaction does close, is there any financial impact we should be thinking about for SSE?

So first, on the data center point. you remember, Pavan that 6 months ago, we were being quite cautious about the data center trends and saying to investors be very careful about extrapolating something from the U.S. to our home markets. So maybe over the next 10 years, we see 160 terawatt hours of additional demand for the EU and maybe 35 terawatt hours for the U.K. And so it's important to start there. If that is too cautious, if we've underplayed that, then from a macro perspective, obviously, you'd expect very constructive effects for a lot of our businesses.

You'd expect a higher demand to be very good for renewables in terms of building out market solutions, but high demand also for our networks businesses and indeed, distribution given its location, which we obviously talked about in the earnings presentation. There are other obvious effects as well. We have sites that are well positioned in our Thermal business and our Customers' business has a good suite of offerings that would be, we think, very much welcomed by hyperscalers. So on all of those macro conditions, we're well placed. Then, of course, just to answer the more micro elements of your question, because Ireland has been slightly ahead in this and because of our electricity brand and some of the work our Renewables business have been doing, we are well linked in and have very good relationships with the sort of companies you might expect to be investing back into GB, and we'd expect that to be able to realize finally as we go through some of those relationships in the future as this trend is responded to.

Then for ED3 and the SSMD, I mean the first thing I'd say is the investment case is very clear. A year ago, we would have been referring you to the SSMC and the line in there, particularly that Ofgem said the industry needs to be ready to accommodate rapid electrification. We have also been referring to you to the NIC report and the doubling of demand. What we're saying to you this morning is actually on the ground, we are seeing that. We are seeing a big uptick in EVs usage. We are seeing increased demand connections come through, and we're seeing increased demand for data center connections, particularly again in our southern license area.

And therefore, we think the strategic case for an ED3 settlement, which recognizes the growth prospects to the economy of electrifying at a distribution level, we think, is very compelling. Of course, we recognize that Ofgem needs to get the balance right. But we'd also point to one thing maybe that came out yesterday with the price cap that talks about an increase in over GBP 200 for domestic energy users. I think gas prices were up 24% for domestic users, but electricity prices were only up 5%. And we see that as one of the good features of electrification that U.K. consumers will be less exposed to prices if we can go down this route. And clearly, distribution build-out will be an important part of that.

In terms of the loan note, yes, so at the end of March, our loan note with OVO was just over GBP 220 million. And once their sale of the Retail business completes, that will trigger the automatic repayment of that loan note in full. And look, that is part of our GBP 2 billion disposal program. And if you remember back in November, we said over 25% of that GBP 2 billion will come from noncore assets towards -- in the earlier part of the plan. So clearly, the OVO loan note will be the first part of that. We also have our last remaining stake in a waste-to-energy plant in Slough. And again, that's noncore. So that will happen probably during 2027 as well. So yes, the OVO loan note can be the first piece of that disposal program.

Your next question comes from the line of Dominic Nash from Barclays.

It's Dominic here. A couple of questions from me, please. Firstly, on capacity markets. We had a capacity auction T4 early this year. I think it was notable for a couple of things. One, it came in quite a low number, GBP 27. And when you dug into it, I think there was a significant increase in batteries and demand side management potential. And secondly, I think there's a big decline in the gigawatts that your CCGTs secured. So with that context, the questions I've got here are, firstly, could you just give us sort of like your view as to whether the capacity market is going to structurally change maybe into a lower for longer with the batteries sort of coming in or whether you think that the consultation coming through may move it up?

And secondly, on your CCGTs, what do you currently see is going to happen if they do not win capacity market auctions as we get into sort of the early 2030s? Are they going to be betting for closed? Or do you think you're going to be refurbishing them? And interestingly, I think answer to your question earlier to Pavan, I think you talked about data centers. You talked about it being positive for renewables and networks. Is there going to be a potential role for your CCGTs there?

Yes. Dominic, quite a lot there. I mean, so firstly, thank you for helping with the Pavan question. I should have mentioned, of course, flexibility is going to play a part. So thank you for helping me fill that gap that I left there. Look, just on the capacity mechanism, it's been a really successful instrument, clearly. It has enabled the market to navigate quite big energy transitional forces whilst retaining security of supply for all. We expect the capacity mechanism to play an important part going forward. And you referenced the consultation that the government is currently leading.

And of course, like all consultations with government, we'll be very actively involved in that and trying to make sure that the good feature of the capacity mechanism in terms of the security of supply it offers to customers continues. You're right for the T-4, we didn't take contracts on Peterhead or Medway. Of course, there is a T-1. So we will see how that progresses over the next few years. And I guess there's a kind of future market scenario point here. So what do we know is going to happen? We know demand is going to increase, but none of us know by quite how much.

We know that some legacy nuclear are going to close. We know that interconnector flows will be slightly complicated by the fact that other companies will be going through their own energy transitions. And we know also that the 37 gigawatts of CCGTs currently on the system are aging. And so it would feel to me that a market needs to make sure that it can move forward in a very secure, stable way against all of those factors. And therefore, I do see a role for CCGTs going into the 2030s.

Your next question today comes from the line of Deepa Venkateswaran from Bernstein.

I have 2 as well. Just starting with ED. I was picking up that you're still doing this transformation in your distribution division, which I think is still underway. So just wanted to see, it's not obviously an area where you're spending as much relatively higher CapEx. I was just wondering what that transformation is? And then any thoughts on Ofgem stance on ED where they're saying that heat pump penetration is probably maybe the biggest uncertainty, and they believe that's going slower.

I know you mentioned that in your region, data centers and EV pickup is quite high, but often seems to suggest that heat pump is a major driver. So just any thoughts on heat pump? And secondly, more a clarification on the AI data center opportunity. Martin, are you saying that this is not something in the plan and this could be something for the future, and therefore, it's an optionality and upside. And there isn't anything too material in the current CapEx plans in the transmission or distribution on CapEx required for data centers and likewise, anything in your FlexGen guidance, et cetera?

Thanks, Deepa. Maybe I'll take the last question, Barry. Just on the first 2. So this, we've got a first-class management team, and they have been undergoing a big change program in that division. What we were trying to highlight during our earnings presentation was the fact that we think they're making really good progress, so we see our customer satisfaction scores have increased, we hav edeployed CapEx in some pretty complicated areas, particularly the subsea cable links we referenced. We have enjoyed winning an incentive under the DSO. And we also think some of our customer vulnerability programs have also been very good, including the issuance of 20,000 home batteries to vulnerable customers.

On top of that, we've got the -- a transformation program where we're investing in systems, which we think will realize real benefits in terms of quality, efficiency, productivity. So we think we're in a much improved place and I back that management team to deliver really, really good upside, which is really important given the demand trends we have already referenced that are going on. Then in terms of your more macro question on heat pumps, look, I mean, predictions about EVs, heat pumps, data centers move around all the time.

What we know is demand overall is constructive. What we also know it is likely demand growth is to be pretty nonlinear, difficult to predict. And we would argue that a system needs to be resilient against any future configuration that comes through. And I don't think in the medium term, our view of heat pump deployment has actually really changed that much. It might just be going slower to the front end.

Yes. Look, in terms of what's in the plan for data centers, there's nothing in the financial plan for data centers in the plan of 2030. Clearly, Martin outlined earlier on with lots of conversations going on. And obviously, we have lots of opportunities right across the portfolio. So anything that will be more upside towards the end of the plan if start to come through, but more likely into the early 2030s.

Your next question comes from the line of James Brand from Deutsche Bank.

I had 2 questions. The first is on wholesale CfDs. It seems like that could be quite an attractive opportunity for you if the price was set at a reasonable level and the duration of the CfDs was reasonably long. Could you tell us kind of any initial -- appreciate there's not that much detail that's been set out yet, but any initial thoughts on wholesale CfDs and whether you think that might be an interesting avenue for you? That's the first question.

And then the second question is on -- I appreciate kind of electricity demand and data center has been touched upon a bit already, but I was quite struck by National Grid at their results they said that they had a central case for a demand increase where they expected 19 gigawatts of demand increase in just the next 5 years, of which they thought 10 gigawatts would be data centers, which is obviously that's an absolutely kind of huge number relative to peak demand.

And obviously, you kind of touched upon the capacity market earlier. It seems very, very different from what's factored into the capacity market assumptions. So I was wondering, I know you probably don't want to be exactly drawn on a precise demand number, but is something like that kind of credible in your view? In case you have to say yes because you don't say National Grid is totally not credible. Just some thoughts on that because it seems so dramatic that it could be quite transformative into the outlook if that actually materialize, what would it mean for you?

Yes. Thanks, James. I mean just on the wholesale CfDs, I think it's more to refer you to the answer I gave earlier. Obviously, it's an idea that's been positioned by the government. It's being consulted on. And of course, you'd expect us to take an active interest in that consultation and we'll see where that leads. Just in terms of demand, again, I mean, I think the National Grid number you referenced, I think, sounds similar to NIO number I've heard. So those are the kind of numbers that are kicking around the industry. Look, we wouldn't put a number on it ourselves. But again, I'll just refer you back to the fact that, a, we're seeing demand shifting positively for electricity.

And secondly, I think it's very, very difficult for anybody, no matter what their insight to completely accurately predict how demand will shape itself over the next 3 to 5 years, given some of the big trends that are going on and some of the accelerants that are affecting those trends, including the fact that global gas prices are so high, global oil prices, diesel prices are so high, which is maybe accelerating the trend for EV take-up. So we'd be quite cautious about that, but we'd be advising policymakers that it is incredibly important to have resilient, stable frameworks and systems that can respond to any of the future energy scenario outcomes that emerge.

Your next question today comes from the line of Harry Wyburd from BNP Paribas.

So 2. The first one is going to be impossible to answer, but the purpose of it is just to get a bit of color on how you think about it. So obviously, we've been following politics very closely. And if you read carefully into what Andy Bernan has been saying recently, the main word that crops up is control rather than perhaps nationalization, which people are worried about in the past. So very cognizant that it's very hard for you to speak and answer on this. But is there any way that you think the government could get more control over utilities like SSE that would be constructive? Or that you could work with? Or have you done any thinking internally about how that could work in practice?

Or do you have any thoughts that you want to share on U.K. political sort of permutations from here? So that's the first one. The second one is more technical, more Barry's question. So I think on Slide 17, I think your tax rate guidance looks like it's gone down. I think at the half year, you were guiding to double-digit effective tax rate over the plan, and now it's mid to high. So has there been a mix shift in the 2030 guidance that we should be aware of?

Look, I mean, to answer the politics question, I mean, the first thing to say is there's obviously good consensus with the government for energy transition. It was 1 of the 5 missions they came into power and advocating for. And look, whether it's driven by net zero dynamics or right now probably by energy security and energy affordability dynamics, we see those as remaining very strong. And I would also say that what they have done and indeed, previous government stretching back over probably 1.5 decades has delivered a market which is now delivering prices 30% below where they would have been if we hadn't started this transition. Then I'd also say, how has that happened?

That has happened because the mechanisms that have driven that, whether it's the CfD or indeed the capacity mechanism to ensure security of supply underneath it have proved to be very robust mechanisms, which are successful in attracting private capital and alongside a strategic regulatory approach, particularly in the last few years, which has driven networks growth, particularly transmission, that has enabled us as an industry and us as a company to deliver our share of that. Then I'd just quickly point you to -- and I know you know this, but just to remind, what does the government actually achieved in the last couple of years. If you look at its Clean Power 30 plan and then you kind of go through some of the targets on that, for offshore wind, the AR7 results, I thought was very strong, the 8.2 gigawatts. Clearly, they've moved on planning.

They've looked to resource consenting units. They've moved on SMRs, CCS. And also, they have obviously given Ofgem a direction on the capital floor for long-duration storage. I guess what I'm saying is the government has a record of delivering through energy transition and trying to maintain systems and remuneration mechanisms that continue to attract private capital because the scale and the investment needed is obviously so significant. And obviously, we have been pleased to be part of that in terms of our share of that infrastructure investment and delivering to consumers.

Look, on the tax rate, no, there's no change to the average tax rate on the new plan for the 5 years at 2030. We always said we are in the mid- to high single digits, which clearly expect with a big ramp-up in CapEx as you go out. That's clearly slightly lower than the old plan, which went out to '27. But clearly, we have a much higher CapEx program in the updated plan we put out in November. So there's no change to that.

Your next question today comes from the line of Peter Bisztyga from Bank of America.

So a couple of questions from me, [indiscernible].

I am sorry, Peter. I am sorry we're really struggling to hear your question. I'm so sorry.

Peter has disconnected. I will now go the next question. And your next question today comes from the line of Ahmed Bilal Farman from Jefferies.

First, a few quick clarification questions. Firstly, can I just ask more about the FlexGen outlook for the year ahead? Obviously, since you have given us guidance, sort of the geopolitical environment, volatility, gas prices are much higher. And maybe you can help us understand how should we think about this environment sort of feeding into the outlook for the gas plants? Obviously, you're maintaining the guidance for thermal, and I'm trying to understand, is that sort of conservative or there's sort of a better macro environment behind that? So that's the first question. Secondly, on EV3, can I specifically get sort of interested to get your thoughts on cash advancing measures. What's your take on that? There still seems to be an ongoing debate about depreciation life assumption. Is that sort of a critical part? Those are my 2 questions.

Okay. I'll take the question and give the few questions. Barry, if that's okay, I would hope. Look, obviously, thermal, it's a Flex business, which responds well to spark spread volatility. And there have been -- over the last 5 years, obviously, there have been years when that volatility has led to quite high remuneration and other years where actually things have been actually pretty benign. The way we probably think about it internally is in the very volatile spark years, of course, we'd expect thermal to do better, but we'd probably expect lower renewable price capture, particularly in the wind business and maybe a little bit better in hydro.

So we kind of see it as that kind of hedge. Equally, in a kind of low spark spread year, that would imply to me quite high renewables and maybe high renewable yields kind of net off kind of thermal. So we kind of see it as a balanced risk-managed business. Of course, there are scenarios where those correlations also slightly. But right now, volatility is definitely in the gas market rather than necessarily the spark spread.

Thanks for the question. Look, on EV3, look, it's still obviously very early in the process. And I think Martin said earlier on, a lot of the big decisions have yet to be made to be paid. In terms of the cash measures you spoke about, look, obviously, they're looking at moving the cost of debt to the semi-nominal, which is in line with T3, which -- that's fine. I think that makes sense to us. Things like asset lives, et cetera, that's all still part of the wider discussion. I'm not going to get drawn into specifics of that today. Ultimately, for us, we look at the package and around ensuring that it's investable and financeable for the strong growth that's coming there, but it's probably still a bit early in the process to get into the finer detail.

Your next question today comes from the line of Jenny Ping from Citi.

A couple of questions from me, please. Just firstly, back to the point around politics and affordability. Obviously, this is an area where the government is looking to address. Can you just sort of talk us around the areas where you think there are some low-hanging fruits for governments to effectively address some of the affordability and the bad debt situation. Obviously, bad debt doesn't directly affect you, but it is a burden both economically and politically. So that would be my first question.

Secondly, slightly long term, Dom earlier touched on the batteries, the volume of batteries that's coming through. I was just wondering what your thoughts are on that battery impact in terms of slightly medium, long-term impact on your CCGT fleet in terms of shaving off some of the peaks and troughs and therefore, its ability to capture some of the benefits. And I guess that goes also for the pump storage asset.

And then very lastly, back to Slide 17 in terms of guidance. Harry already asked about tax, so I asked around the interest. I think that you only talked to guidance of 5.5% on new issuance, but I presume the size of the capitalized interest will also go up with capital investments going forward. So can you give us a feel of what the progression looks like for '27 and '30 versus that 212 reported?

Look, on the first point, I mean, obviously, matter for government, but you have heard us welcome the move from the ROC, the GBP 150 of ROC from bills to taxpayer back in November. There may be a little bit more scope on levies moving, but that is obviously a decision for the government. I guess we are focused on our part of what we can do. That is making sure that our fleet is working optimally and efficiently. It is making sure our projects are delivering, including Dogger Bank, so we can put that low marginal cost energy onto the system. And of course, it's also focused on what we referenced earlier, things like transmission operations, which have saved GBP 300 million of consumer cost through avoiding curtailment costs.

So we're very focused on that as a business. Then in terms of your battery, I think it's a battery versus CCGT question. So we're invested in batteries because they provide a certain optionality or market dynamic that enables a better risk management of our overall portfolio. We don't see it as batteries or CCGTs just because of the nature of the flexibility they offer and the services they offer. So I wouldn't see that necessarily as competing against the possibilities for CCGTs going forward. I think it just is an additive option onto a system which will have more intermittency going forward. And I'd point you to various things. So for gas turbines, I mean, clearly, a lot of their value right now is in a balancing mechanism responding to grid instruction on ancillary services. And I think they offer a very different market profile to the system operator than batteries.

Look, in terms of capitalized interest, so capitalized interest went up in FY '26 by about GBP 80 million, which we're capitalizing interest at around just north of 4%, which you'd expect given we had a record CapEx year. And look, in line with our standard accounting policy, we'll expect capitalized interest to go up as interest cost goes up and as CapEx goes up across the plan. So it will go up accordingly in line with that CapEx profile.

Your next question today comes from the line of Ajay Patel from Goldman Sachs.

Look, I wanted to just maybe focus on renewables. So very successful in the offshore auction in January, securing 1.4 gigawatts. You potentially have 2.7 that could go into the next auction in December. And you look at the CapEx allocated out to 2013, it's 4 billion in size. And I'm just thinking how do we think about capital allocation in renewables? Is it very much that you keep sort of guardrails around the amount of capital deployed in that direction and that we should maybe see higher asset sell-downs if you're successful in future auctions and through quite a decent size of auction wins? Or do we think that you'd be willing to sort of overshoot those sensors if the right opportunities arise?

And I guess maybe the other thing with that is how do you assess risk in this situation or cost of capital? And if you think that you're quite fractured in regards to government and your opposition and to what degree you could have quite sizable swings in energy policy in regards to renewables if you take some more extreme positions, how do you sort of reflect that in the way that you look at risk return? Do you look for better, higher returns as a result and therefore, you in your cost of capital? Or you have a lot of confidence in the contracts and the way that they're set to give you protections regardless of any changes that could happen over the next 5 years?

Yes. Look, happy to go first. So look, in terms of renewables, look, we have a rich pipeline of opportunities in renewables, and we've always felt that we have a very clear investment criteria. We have very clear and strict hurdle rates, which the projects have to meet before we take them through. And that's back to Martin's point earlier about value over volume. And look, when we were doing the plan back in November, we were looking at that pipeline and the opportunities, and that was all part of the stress testing that we did at the time. So that is all catered for in the plan. A lot of the big mega projects you're speaking about, whether it's Berwick Bank or Corey Glass or some of those other big projects that are coming through. In reality, we won't own 100% of those projects as we get through FID. And the timing and the phasing of those projects coming through as well also has to be factored in. And we also -- what we always look at is project finance debt as well for those big offshore projects.

So that is all about from the plan. Any of those really strong projects that meet our hurdle rates will absolutely be taken through. Look, in terms of how we price in risk, we have very clear hurdle rates that are publicized. So for offshore wind, greater than 12% equity returns. But also on top of that, you also contingencies, risk costs, et cetera, that we build in. And that's always been part of what we've done, whether it's back in Dogger Bank or the Berwick Bank auction as well. So that all gets factored into the consideration at the time when we're making the bid.

And maybe just -- if I could just say one quick thing on -- I think you said sizable swings in renewable policy. I mean, look, we said this before, but just to reiterate, given what I outlined earlier, the inevitable increase in demand, the inevitable loss of some legacy generation, clearly, the U.K. is going to have to build more wholesale generation. And we consistently have said because we believe it to be true that renewables are cheaper. They're also available. We can get turbines. That is not necessarily true on mass for CCGTs, for example, and they are quicker to deploy. And that's obviously a really important fact for any political leader or policymaker to consider.

Your next question comes from the line of Charles Swabey from HSBC.

I have 2 questions. One on the balance sheet. You have previously spoken about some headroom later in the plan as more contracted and regulated earnings come through. Just wondering if this view has changed for better or worse in the last 6 months since you put it all together given the final determinations, capacity mark auctions and the upward move in rates. It's the first question. And the second one, just a smaller one on renewables. The return expectations for the other renewable assets such as batteries looks like you've lowered the spread to WACC range there. Any color on this would be useful -- is that due to competitive pressures or anything would be helpful.

Yes. Thanks for that. Look, on the second question, no, there's been absolutely no change on lowering the spread of that, that's absolutely as it was in November. So absolutely no change there. Look, in terms of balance sheet headroom, absolutely nothing has changed in terms of balance sheet headroom. We flagged in November. We sized the plan to be below 4.5x net debt to EBITDA throughout the plan. And we said then we can still go above that slightly and still be within our existing credit rating metrics.

So absolutely, no change to that, and that was all part of the stress testing we did at the time. And then secondly, I'd say, since we put the plan out, the rating agencies have all supported that plan. We've seen Moody's reduced FFO to net debt from 20% to 18%, which was in line with our expectations. And S&P have also flagged to looking at the metrics again as we start to deliver out the regulated earnings and the regulated growth. So absolutely nothing has changed since November.

We will now take our final question for today. And the final question comes from the line of Peter Bisztyga from Bank of America.

I'm going to try again. Can you hear me this time? Excellent. Okay. So just 2 kind of remaining questions from my side. One, just on the time line for your offshore wind projects. So I was just wondering if you could else state a bit on Berwick Bank in terms of when you expect to take FID and how long that might take to build out and whether there's any kind of grid connection issue there that we should think about? And also on Dogger Bank, you're talking about the accelerated sort of turbine installation, but do you still expect there to be 12 months between the delivery of the different phases there.

So that's kind of my first question. Then second one, much more sort of general. There continues to be a lot of cost inflation in the value chain, especially for raw materials. We've already seen the costs for your RIIO-T3 program go up from inflation. And I'm just wondering whether you see upward pressure on your current 27 billion network CapEx budget and basically how you're managing that and how you're thinking about that.

Okay. So I'll leave the second question, Peter. Sorry about early, by the way, to Barry. Just on the first question, I think we said it in the presentation, FID on Berwick Bank should be some point next year and then obviously build out about 4 years from there. And then for Dogger Bank, there is no change from where we were 6 months ago. So we're talking about COD on Dogger Bank A Q1 '27 and Dogger Bank B at the end of summer '27.

Yes. Peter, I think your question was on cost inflation in the transmission projects, I think you said. So look, 5 of them were already in construction. So clearly, for those 5, obviously, we've already locked down the contracts. And of course, there is price adjustment mechanism in -- as part of that regime where you can reopen for certain inflationary costs. And for the other 6 projects, well, we haven't taken them to FID yet, and we won't go for the project assessment in those projects until we have final contracts, we know actually where the costs have landed. So again, we're protected from that perspective. And again, of course, they would also have usual price adjustment mechanisms as well. So no concerns there.

Okay. But sorry, is that sort of -- have you baked in some kind of contingency for inflation into your sort of overall 22 billion budget? Or how is that?

Yes, that would all be part of the analysis and the scenario testing we did back in November time, absolutely.

Thank you, Peter. Look, thanks for your questions, and thanks to you for your time today as well. This morning underlines just how excited we are about the momentum we have behind our plans and how resilient we are as a business to macro events in the world around us. We look forward to seeing many of you in the coming days. Thank you for today.

Good morning, everyone, and thank you for joining us today as we set out our transformational fully funded investment plan to deliver high-quality capital and earnings growth. As I give my first presentation as Chief Executive, I am delighted to say that before us lies the most exciting period of growth I have seen in my near 3 decades at SSE. And by leaning into the U.K. networks opportunity, we are underlining our position as a top-tier European energy player.

Over the course of the next 30 minutes, we will outline how we have been ramping up delivery of game-changing infrastructure, provide a brief update on our financial performance. and finally, lay out the detail behind a bold new plan that faces into the paradigm shift underway in our sector.

Before I hand over to our Chief Financial Officer, Barry O'regan, to run through our results for the half year, I want to briefly set the context for how our integrated strategy optimizes growth and creates long-term sustainable value. SSE's position at the heart of the energy transition in our core U.K. and island markets has created a once-in-a-generation opportunity for the group to significantly increase our investments in homegrown, secure and clean energy infrastructure.

We have great options across networks, renewables and flexibility, but within that, the single biggest opportunity is in transmission, and that's our focus this morning. Under this plan, we will be investing GBP 33 billion, of which 80% will be in networks growing the regulatory asset base by a compound annual growth rate of around 25% to 2030 and positioning SSE as one of the fastest-growing electricity network companies in the world.

This will drive increased levels of high-quality index-linked earnings with clear visibility to achieve between 225p to 250p earnings per share by 2030 after adjusting for the equity placing we have announced today.

We are also able to extend our sustainable and progressive dividend policy over the same period. And it is important to emphasize that this is a fully funded plan with a firm commitment to maintaining a strong balance sheet. Around 90% of this will be self-funded through strong operational cash flows or by steady increases in our levels of net debt and hybrid capital. The remaining 10% will be achieved through a combination of today's equity placing as well as targeted disposals.

This is a hugely exciting investment plan, which will deliver significant long-term value creation over the course of this decade and beyond. Our confidence is underpinned by SSE's track record of delivery. The roll call of SSE-built additions to the energy system in recent years is impressive and includes the delivery of complex projects like the Shetland HVDC connection, Viking Wind Farm, Seagreen, the Northeast 400 kV scheme, Slough Multifuel and KB2, and the relentless delivery continues with the headway we have made on construction and planning milestones over the past 6 months.

In Networks, construction is now well underway on 4 of the 11 major transmission projects with all major consents submitted and supply chain secured for the remainder. In Renewables, we are making strong progress on our 2.5 gigawatt construction program, including Dogger Bank, where 88 out of 95 turbines are now installed with the projects remaining on track with the guidance we issued over a year ago. In addition, Yellow River is fully commissioned and Berwick Bank is consented and on track for participation in upcoming auction rounds.

And Flexibility completes the picture as we progress construction on 2 vital new thermal generation projects in Ireland. As we'll set out today, networks are the growing core of our investment plans, but they continue to be complemented by selective and disciplined growth projects across our other businesses. And of course, it is critical that in making this progress, we put our people first. Everything we will talk about today is underpinned by the hard work and dedication of our employees and contract partners. So keeping them safe and well will always be SSE's primary concern.

It is, therefore, pleasing to report continued strength in our safety performance through a period of increased construction activity over the past 6 months. And with investment set to accelerate, it will be critical to maintain our focus on looking after those who work for and on behalf of SSE.

I'll now hand over to Barry for an overview of performance in the first half of the year before we turn to our exciting plans for the next 5-year period.

Thank you, Martin, and good morning, everyone. I'm sure you'll be keen to see further detail of our new investment plan. However, it is important to briefly cover financial performance in the first half and our reaffirmed outlook. The GBP 655 million adjusted operating profit delivered by the group over the past 6 months was in line with usual seasonal averages and, therefore, keeps us on track to deliver on our full year expectations.

The first half saw a step change in transmission investment and earnings. So it's worth pausing to highlight the continued evolution of the latter. Around 2/3 of earnings were generated by regulated networks, an increase relative to the comparative period and in line with the continued upweighting of investment in that area. The increase in high-quality regulated earnings is a trend that is set to continue as we deliver on our investment program.

Turning to the bottom line. The group delivered adjusted EPS of 36.1p, in line with our expectations for the period. In our combined networks businesses, adjusted operating profit fell by GBP 84 million over the first 6 months. Profits almost doubled for transmission, driven by the continued increase in investment as we make substantial progress on our large capital projects.

Turning to Distribution. Profits were lower as expected given the nonrecurring inflation adjustment in the prior period, with operational performance remaining strong. Overall, we continue to be pleased with the underlying financial and strategic performance achieved by our regulated businesses, which sets them up well for their future growth.

In SSE Renewables, strong progress continues to be made on Dogger Bank construction, and we were delighted to announce full completion of Yellow River in October. Whilst increased capacity largely offset unfavorable weather conditions, the 20% decrease in hedge prices that we flagged in May meant that adjusted operating profits have reduced this period. With the usual seasonality, meaning that over 2/3 of operating profit for this business is generated in the second half of the year, we remain confident that earnings will be higher on a year-on-year basis.

Turning to flexibility. Adjusted operating profits have fallen since the previous period. This movement was mainly due to the customers business, where a bad debt release in the comparative period is combined with lower volumes in the first half. We expect a greater proportion of profits to be recognized in the second half for this business. Below the line, net finance charges were stable, reflecting a combination of capitalization effects and use of hybrid debt with coupons expected to increase in FY '27.

Our tax rate continues to decline with the full expensing capital allowances available on our increasing investment program. As you know, our dividend policy is to deliver 5% to 10% growth across the year. And as set out in May, our planned approach means that we today declare an interim dividend of 21.4p, being 1/3 of our FY '25 dividend.

Turning now to the financial outlook for FY '26 and FY '27. We are pleased to reconfirm the detailed segmental guidance we gave in May. With half year results within the normal ranges of seasonality, we see the strong performance noted today continuing through the key winter months, subject to the usual variables around weather, market conditions and plant availability. And consistent with the approach in prior years, we will provide specific EPS guidance later in the financial year.

Looking further ahead, the strategic execution that Martin highlighted earlier means we remain confident in delivering against our FY '27 earnings projection. With the first half financial performance now covered, I'll pass you back to Martin for more detail on our transformational investment plans.

Thank you, Barry. It's important to set the scene for why a huge acceleration of investments in infrastructure will be needed in any realistic energy transition scenario. Regardless of shifting political priorities, electrification of the global economy is unstoppable and accelerating. As you can see from the slide, there is a dramatic ramping up of electricity demand from 2030 out to 2050. That is a staggering amount of growth for the system to accommodate, particularly against the backdrop of an aging gas generation fleet, nuclear closures and a reliance on imports from jurisdictions going through similar uncertain transitions.

It is also worth emphasizing that the surge in energy demand is unlikely to be smooth or linear. We will need a system that can accommodate uncertainty. These projections have a number of important implications. First, the need for a much more strategic centralized approach to system planning to ensure the right infrastructure is built in the right places at the right time. We are seeing this materialize through the Clean Power Plan, the development of the Strategic Spatial Energy Plan, which will follow and ambitious planning reform.

Second, it requires a clear focus on the cost of capital and crowding investments in electricity infrastructure because this is what will deliver in the long-term interest of customers. This was a key factor in the government's welcome decision to rule out zonal pricing in the summer and remains the driving force behind policy and regulatory decisions that are adding momentum to our strategy for value-enhancing growth.

Meeting the needs of an electrifying economy requires 4 things: rapid expansion and reinforcement of the transmission network, strategic local distribution upgrades and modernization, a doubling or even tripling of homegrown energy generation supply and a greater focus on storage and flexibility to keep it all in balance. All of these drivers underline the multi-decade organic growth opportunity in front of SSE's carefully selected business mix. The need to alleviate system constraints and rewire Scotland underpins the huge projects, Transmission has well underway.

This is investment that the grid needs today, and it will lay the foundation for development of smart grids and a digital economy in the future. In distribution, the next price control will mark a shift in pace as we deliver increasingly strategic plans that accelerate electrification for consumers. Across renewables, which remain the cheapest form of new generation, we have a premium pipeline of options and significant delivery expertise. The North Sea leads the world in offshore wind and the capability we have developed through projects like Dogger Bank and Seagreen gives us an enviable platform for future growth.

And finally, our Flexibility capabilities give us resilience against unexpected market developments in an increasingly electrified world. Thermal plants will be rewarded in all transition scenarios, whether providing grid stability or security of supply, and it is complemented by a customers' business that is meeting the demands of a digitalized world focused on AI and data center growth. With supportive policy frameworks and the expertise to deliver, SSE has unique access to the multi-decade organic growth opportunity in these core markets.

We briefly touched upon some of these numbers in an earlier slide, but it is worth walking through what this once-in-a-generation opportunity means. The GBP 33 billion investment plan presented today is a trebling of the investment we delivered across the previous 5 years. This investment brings with it industry-leading capital growth with our combined networks RAV set to triple to around GBP 40 billion by the end of the decade, a 25% compound annual growth rate.

Disciplined further investment in renewables is likely to add a further 1.5 gigawatts of projects, combining with the 2.5 gigawatts already under construction to take installed capacity to around 9 gigawatts by 2030. This is growth that will create significant value for the group across the life of the plan and the longer term. It will underpin an increase in adjusted EPS to between 225p and 250p by FY '30 after accounting for today's proposed placing.

When compared to last year's FY '25 EPS base, which remains unchanged of 160.9p, this is compound annual growth rate of between 7% to 9%. This accelerated investment is underpinned by secure U.K. government regulatory frameworks, and it will unlock growth across the wider economy and support thousands of jobs over the course of the plan.

Turning to Transmission. Ofgem's strategic approach to regulation has provided unprecedented and welcome visibility on investment to 2030. While we continue to engage constructively with Ofgem ahead of the final determination on RIIO-T3 next month, the vast majority of the transformational CapEx plan we announced today has its origin in the ASTI and LOTI programs. Between the agreed ASTI and LOTI regimes and business-as-usual programs, we see SSEN Transmission investment increasing to around GBP 22 billion across the period, net of the share from our supportive investment partner.

This will deliver a 30% CAGR in the Transmission asset base, making it one of the fastest-growing electricity networks in the world, with earnings increasing at an even faster rate over the plan. And as I will come on to over the next few slides, with the high degree of visibility we have over the CapEx plan and with all major consents submitted, we are making sure that the business and the supply chain are well positioned to deliver. The ASTI and LOTI projects are required in every realistic energy scenario. They are well advanced with mature designs, optimized configurations and a supply chain ready to deliver.

Around 90% of our investment in Transmission will be spent on these projects and business-as-usual investments and it reflects the supply chain inflation we have seen over the past few years. These projects will connect homegrown renewable energy and transport the power produced to areas of increasing demand across the country. And they offer clear value for money for consumers by reducing current constraint costs, establishing a foundation for security of supply and reducing our national dependence on volatile energy markets.

This high degree of visibility means that the transmission story today is all about safely and efficiently converting the lines on this map into critical national infrastructure, and this is happening at pace. As I said earlier, 4 of the 11 ASTI and LOTI projects are already in construction and all major consent applications have been submitted. All supply chain frameworks that we need have been secured, and we are working with our partners on their delivery capacity and manufacturing quality. This isn't a desktop exercise. This is securing key equipment. This is inspection of manufacturing facilities.

This is accelerated innovation and support of the supply chain. It is heavy recruitment ahead of need, vast training programs and deep community engagement, and this is all well underway. With our own resource in the transmission business increasing fivefold in the past 5 years, we are putting everything in place to deliver most of these projects by 2030 ahead of the next phase of projects that will surely follow. This is an exciting moment for SSE, for Scotland and for the U.K., but we are acutely aware that local communities have a major stake in these projects.

Having conducted what we believe to be the largest public consultation exercise Scotland has ever seen, we continue to engage with all parties and adapt our plans where we can. We are also investing in housing and community benefit funding that will have a lasting positive impact on the North of Scotland. Ultimately, these vital projects are in our license conditions, and they will be delivered. The need is there, the supply chain is there and consenting is progressing. They will make a huge difference to our energy system as constraints are eased and more homegrown clean energy is connected, providing a tangible economic payback for consumers.

Distribution upgrades are more localized, but they are much greater in number and hugely exciting in their own right. In its early consultations on the upcoming price control, Ofgem agrees. The regulator points to significant growth in electricity demand driven by the advance of technologies like electric vehicles, heat pumps and digital industries. Distribution southern license area has enormous strategic potential as it unlocks data center growth in the M4 corridor, while the northern network will connect increasing Scottish renewables capacity with local communities.

We, alongside the system operator, are already creating the plans and Ofgem is working on the frameworks to move from a just-in-time network to a well-planned strategic one. At the same time, the government is legislating for local area energy plans to create a bottom-up vision of local needs. We see this business as consistently delivering around 10% RAV CAGR through ED3 alongside high-quality index-linked earnings. And it promises to drive growth for the group well into the 2030s and 2040s as we bring electrification to the doorstep.

Renewables will be the foundation of the future global electricity system. SSE has a premium pipeline and world-class teams to deliver clean North Sea energy, which will power European economies for decades to come. In the course of our 2030 plan, we will complete major projects like Dogger Bank, which are backed by long-term, high-quality and index-linked CfD contracts. This reflects and is indeed a direct consequence of our demonstrable track record of driving value through selective capital allocation in premium projects.

We also have further options in offshore wind and additionally, a significant pipeline onshore. Our plan outlined today includes around GBP 2 billion of uncommitted CapEx with which to bring forward further investments. But let me be absolutely clear. SSE will continue to maintain the strict capital discipline that has served us so well in the past and prioritize value over volume.

Any investment we sanction will have a clear route to value creation with adequate contingency for execution risk, deep consideration of supply chain capabilities and will be delivered through our established models such as via partnership and project finance in offshore wind. But we must not lose sight of the longer-term opportunities here. The U.K. and Ireland will need a strong and diverse renewables base to meet their energy goals, and there is no doubt SSE will be a major part of that.

I'll now pass you back to Barry for more on the visibility on earnings and value creation this plan gives us and how we are funding it.

Thank you, Martin. As we have outlined today, it is crystal clear that the right strategy at this point in the energy transition is to pivot the group further into the transformational networks opportunity. And Martin has just outlined not only the strategic importance of this investment, but also the high degree of visibility we have, our confidence in delivery and the market-leading capital growth it brings.

Over the next few slides, I will cover the clear visibility this strategic plan provides of value creation and earnings growth through the rest of the decade and beyond. Today's investment plan marks a significant evolution of capital allocation from the preceding 5 years. What has historically been a 50-50 investment split between networks and markets now becomes 80-20, upweighted in favor of networks. And this upweighting provides the group with a significant enhancement in earnings visibility.

By FY '30, we expect that around 80% of earnings will be index-linked through either the stable regulatory framework provided by networks or from our energy businesses, where CfD, ROC, REFIT arrangements and a rising capacity mechanism provide a clear line of sight over future earnings. This is a material step-up from our position today, offering investors significant earnings stability and protection as we materially grow the business over the course of the decade.

At the same time, we will retain 20% of value upside potential, mainly through flexible services, which also provides the group with resilience against unexpected market events. And with 80% of investments targeted towards networks, it should come as no surprise that the majority of expected earnings and asset base growth will come from those businesses. Whilst negotiations over T3 remain constructive and ongoing, we expect the rapid regulatory asset growth in those businesses will deliver RAV of around GBP 40 billion by FY '30, and this will provide a firm underpin to the step-up in long-term earnings.

And while more moderate earnings growth is expected in Renewables and Flexibility, these businesses continue to provide the group with value upside potential, as I have mentioned. It is important that as we pivot and grow, we retain a sharp eye on commerciality and efficiency. And that is why we are also committing to driving up-weighted annual recurring cost efficiencies across the group of around GBP 200 million by FY '28. This is an investment plan that has discipline and efficiency at its core, that offers visibility of value creation and, therefore, provides us with the confidence to target adjusted earnings per share of between 225p and 250p by FY '30 after accounting for today's placing.

This is equivalent to a 7% to 9% CAGR from the FY '25 baseline that we reported in May. That visibility of growth enables the extension of our sustainable and progressive dividend policy with dividend per share continuing to increase by between 5% to 10% per year to FY '30. This fully funded plan opens the door to an unprecedented investment opportunity that will change the group's shape, size and overall trajectory. It also has a commitment to a strong balance sheet at its heart, reinforcing our commitment to existing investment-grade credit ratings whilst leaving ample headroom for further earnings growth well into the next decade.

With GBP 33 billion of investment and GBP 6 billion of other cash requirements such as dividend and interest payments, we expect the group will have a total cash requirement of around GBP 39 billion, which will be met via a combination of primarily self-funded sources. Around GBP 21 billion is expected to come from strong operational cash flows during the period, with a further GBP 14 billion from increasing net debt and hybrid capital issued in a steady way throughout the plan.

This expected debt increase is smaller than our threefold increase in regulated assets. And when combined with the growth in earnings, means we remain below 4.5x net debt to EBITDA throughout the course of the plan. Around GBP 2 billion is expected to come from targeted asset rotations across the range of premium assets in our portfolio. These disposals will be timed to meet our investment needs towards the end of the 5-year plan with assets selected to maximize value.

And for the remainder, an equity placing of GBP 2 billion will support the significant increase in investments announced today. We don't take issuing equity lightly, as you can see from the extent to which this plan is self-funded, but it's absolutely the right thing to do to unlock this exciting plan, grow the business and deliver attractive returns for our shareholders. I'll now quickly step through the structure of the proposed non-preemptive equity placing to certain eligible institutional investors, which launched this morning at 7:00 a.m.

The intention is to raise gross proceeds of GBP 2 billion through an accelerated book build, which represents approximately 10% of the current issued share capital. Concurrently, we have a separate retail offer in the U.K. through RetailBook. The proceeds we expect to raise today will enable us to deliver a plan that is the foundation for long-lasting and sustainable growth of the highest quality. We have an exciting opportunity in front of us, and the plan we have announced today represents a pivotal moment in SSE's evolution.

I'll now hand to Martin to close.

Thanks, Barry. We are building on the strength of a business that sits at the very heart of the energy transition. Our balanced portfolio of capabilities, assets and businesses offers investors resilience against inflationary movements and market volatility. With supportive policy frameworks and delivery expertise, SSE has a strategic growth opportunity that will create sustainable value for both shareholders and society for decades to come.

We now look forward to working with investors, governments, regulators, communities, suppliers and consumers to help build a homegrown energy system that is independent of volatile international markets, more affordable for customers and better for the environment. To conclude, this is a defining moment for SSE. We have an ambitious plan that leans further into one of the world's fastest-growing electricity networks, underlying our status as a top-tier European energy player.

And it offers a clear, well-defined funding route that balances the need for financial strength and earnings growth. Rapid capital growth in our businesses as we grasp this once-in-a-generation opportunity, and it offers long-term value creation with clear visibility over earnings growth and a sustainable and progressive dividend policy. This is a hugely exciting opportunity, and we are getting on with delivering it. Thanks for your time this morning.

We will now move to Q&A. And if I can ask that we please keep it to no more than 2 questions each so that we can get to everyone in the time we have. Thank you. I'll now pass over to the operator.

[Operator Instructions] And your first question today comes from the line of Robert Pulleyn from Morgan Stanley.

Yes, rob Pulleyn from Morgan Stanley. First of all, congratulations on a very well put together plan, very exciting times and great to see that earnings profile. I'll stick to 2 questions. I'm sure there's lots. So firstly, if we could talk about the asset rotation, GBP 2 billion as part of your funding package. The footnotes seem to imply it will come from renewables. But is that explicitly the case? And is any stake sale in electricity distribution ruled out or included in the guidance?

And secondly, given today's double news around data centers across Europe, may I ask, should SSE monetize any of its legacy power plant sites with grid connections for data centers as we are now seeing elsewhere, not just in the U.S. but also U.K. and in Europe?

Yes. Rob, thanks for the question. I'll look at the disposal question. So yes, the GBP 2 billion disposals, how I'd look at that is over 25% of that will come from our noncore assets, primarily our Slough waste energy plant, which is the only one we've left. And then we also have a stake in the network -- telecoms fiber company, and we also have a loan note. So in reality, those will all probably take place in the earlier part of the plan. The remaining 75% of disposals will be towards the back end of the plan. It could come from any of our business units. Ultimately, we will decide closer to the time what makes sense strategically and financially for ourselves at the time.

And then thanks, Rob. To your other questions, I mean, data center is obviously a fascinating question. Obviously, we saw the news this morning. I mean the opportunity for data centers and the AI trend, I think, affect us across a number of businesses. I mean, firstly, there's obviously the constructive reality of increasing demand for our generation businesses. There's also the flow-through to distribution, where we mentioned in the presentation we've just given, we would expect an increase in demand in particularly our southern network and for distribution to have obviously a key role to play in delivering that demand.

For the customers business, they're also very well engaged with tech players in terms of CPPA possibilities. And of course, that also applies to renewables and the ability to get generation projects across the line there. Specifically on thermal, we have always said that we think our sites offer very good value in terms of redevelopment and playing into transition trends. And just as a reminder, already on our sites, we have previous thermal sites and these are mostly coal sites. We have built batteries.

We have built multi-fuel. We provided emergency generation in Ireland for the Irish government, and we are also in the process of building an HVO plant at Tarbert. So that kind of underlines the value we've all seen. And of course, the data center angle possibly adds to that going forward.

Your next question comes from the line of Mark Freshney from UBS.

I have 2. Firstly, on the 6 overhead line planning consents that you're due to get middle of next year. I mean you're very impassioned about, Martin, about the conversations you've been having with the community and why these assets are essential. But you are dependent upon something that's very much outside of your control. What is it that gives you confidence that this time, it will only take 52 weeks rather than 2.5 years?

And just secondly, regarding the renewables business, I mean, I think there are some big capital commitments for Dogger, et cetera. it seems to me that you -- I can't remember a time when you've actually reduced spend so much in that business. And is it fair to assume that there's envelope in there for Berwick Bank and maybe a couple of other no-brainers, but you really are pivoting capital away from that business?

Thanks, Mark. Let's deal with the transmission confidence and planning, firstly. I mean, just to reemphasize some points here. Our confidence in the transmission ability to deliver is, firstly, we have had a strategically minded regulator that has given us enough notice to build capabilities. So we referenced a fivefold increase in our resourcing. It is worth pointing out as well that, that resourcing comes -- some of that comes from the North Sea oil and gas, so we get the expertise from that.

But also we've managed to pivot some of our renewables expertise, project managers, project directors, engineers, et cetera, into that business. That's a high-quality resource business. We've also, because of the strategic mindset of the regulator, been able to build supply chain frameworks and contract the supply chain, Tier 1 supply chain partners that we know very well. So we think we're well set up from that perspective. Then it comes down to the planning. That bit is less in our control.

But maybe a couple of things. Firstly, you referenced the Scottish government and their 52-week commitments for overhead line planning, consenting. We see that as backed on the ground by a trebling of resourcing they've put into the consenting units, which will ultimately define and decide some of those decisions. So we see that as a positive. And then just on the numbers, in the last -- just over the last few months, we've had 2 substations and 2 overhead lines consented.

Right now, we have 2 out of 5 of our marine consents and 2 expected soon. We have 5 out of 8 of our overhead line consents, and there's 3 of those in the 12-month process we just talked about. And 13 out of 21 substations consented, including Netherton, which is a major one. So that is the basis for our confidence. We have the ability to logistically get everything ready on the ground with people and supply chain. We think we've got the backing of the Scottish government that understands the transition need and the economic importance of us delivering this infrastructure in a timely way.

Yes. And look, just on the renewables CapEx, we've got about GBP 4.5 billion in for renewables CapEx, Mark. over GBP 2 billion of that is currently unallocated, and we will only take that forward clearly if the projects, as Martin said earlier on, meet our hurdle rates and our discipline. That obviously also allows for Berwick Bank. We've done rigorous stress testing of various possible scenarios and Berwick Bank will be part of that. Obviously, that's a multistage project. And obviously, the timing is to be confirmed and equity ownership stakes, et cetera, has to be decided in the future, but that's all part of the scenario analysis we've done.

We will now go to our next question. And the question comes from the line of Dominic Nash from Barclays.

Congratulations, Martin, on your first results as CEO. I think it's a fair to say that you're setting a high hurdle for future presentations. So congratulations. Two questions from me, please. Firstly, could you give us some color on the wiggle room and the uncertainty around that GBP 33 billion sort of investment program to 2030? Because clearly, RIIO-T3 we will get probably what, the first week of December or so.

And then secondly, on the renewables where you earmarked the GBP 5 billion or GBP 4.5 billion, clearly, we've got uncertainty over AR7 and maybe AR8. So I'd be interested to know why your confidence is set at GBP 33 billion and realistically, could the CapEx numbers go up from there?

Secondly, on the 4.5x net debt EBITDA sort of guidance that you'll be within that limit by 2030, I think that's unchanged from the current net debt-EBITDA number. Could you give us some color again on -- I think the S&P report recently, which was discussing about how you treat JV net debt and whether or not your net debt-EBITDA numbers will need to sort of reflect kind of I think they call it orphan debt in your JVs?

Yes. Maybe just a couple of headline comments while Barry gets the numbers. I mean, we've said and very strongly the CapEx plan and funding options have been stress tested against a range of possible scenarios. And obviously, that is important. I mean just on the specifics of AR7, clearly, we're in an auction process, so we wouldn't say too much about that apart from just to remind investors that we have always and consistently taken a very strong capital disciplined approach to investment. That applies to Dogger Bank, which is why today, we're obviously announcing on Dogger Bank that we're still on track with exactly what we said a year ago.

Obviously, that's a year later than we originally planned when we took FID, but we're still in line to beat our hurdle rate on that. And that's because of the risk-managed way we approach that. You'd expect us to apply all of the learnings from Dogger Bank, but all of that same investment philosophy to future renewable investments, including Berwick Bank, including Coire Glas and other onshore wind prospects.

Yes. And then, on the GBP 33 billion, so I think the easiest way to think about it is GBP 20 billion of that is for the 11 mega projects in Transmission. So the 3 -- lastly, the ADAS 3 projects in the baseline CapEx. So as Martin said, 4 of them are already in construction, a real clear line of sight over to consenting and, obviously, much firmer grip now on the supply chain costs as well. So real clear certainty over that. 20% of the CapEx is for the remaining networks part, so it's primarily distribution. And obviously, we're seeing a much more strategic approach from the regulator as we go towards T3.

So we expect a ramp-up in CapEx as we go to the end of the plan. And then 20% is for the energy businesses. And over half of that is -- about half of that is in construction at the moment. So whether that's the Dogger banks or some onshore and battery projects and about GBP 3 billion is uncommitted. And GBP 2 billion we have allocated for Renewables, GBP 1 million in the Flexible, but obviously, that's quite fungible. And as I said earlier on, that will only be for projects that meet our strict hurdle rates.

And that's all part of the scenario analysis that we've done and the stress testing we've done, which allows for those renewables projects you mentioned earlier on. Then in terms of the balance sheet, so yes, so we'll be below 4.5x net debt to EBITDA throughout the plan and at the end of the plan. And in reality, we could go slightly above that as well and still be within existing credit ratings.

In terms of S&P, yes, our understanding is that they will be temporarily putting on the project finance debt for assets in construction only. So -- and they're the only agency doing that. So for us, that will mean Dogger Bank B and C will go on to the balance sheet, but they will come off again in the next 2 years, but those projects clearly come off at the back end of the -- once they're into operations.

And then obviously, look, Berwick Bank is further out. Clearly, we've allowed for that in our scenario analysis. Again, a lot of those projects are back ended. It depends on the phasing of those projects, what equity stakes we hold in that as well. So we won't need to change our 4.5x net debt to EBITDA for that. That's all allowed for in the scenario analysis we've done. We've shared the plan with S&P. I'm not expecting any surprises there.

Your next question comes from the line of Harry Wyburd from BNP Paribas.

So 2 for me, please. So the first is, I think when we've discussed equity needs in the past, you've talked about awaiting news RIIO-T3 result and AR7. Have you had any discussions with Ofgem recently around returns, but also around fast money that made you more confident to go ahead with this big plan now, which I guess many of us are thinking you might do after once you have some certainty. So was there a trigger here where you felt like you had better visibility?

And then the second, it's on the thread of Rob's questions on data center sites, but actually a different angle on this. And if you think about how data center demand is likely to play out in Europe versus the U.S.? I mean, volumetrically, we've got tons and tons of new wind and solar capacity being added in Europe relatively much more than in the U.S. Volumetrically, I think the picture looks a little bit different.

But in terms of peaks, maybe it doesn't. And I wondered what are you thinking in terms of capacity payments and the levels that capacity payments could potentially get to in a squeezed scenario for peak demand from data centers. Do you think the level of capacity payments that are clearing in the recent auctions are the sustainable level? Or do you think there could be upside to those over time if you start to get real squeezes on the peak demand side?

Okay. Thanks, Harry. Firstly, on the question about Ofgem and T3 engagement, and I think it's a kind of why now question. I mean we said back in the summer that we expected a lot of news flow through 2025. And that news flow included zonal pricing and a decision on that, which, I mean, obviously, that's one of the key themes, investor themes earlier in the summer. And obviously, we referenced in our presentation that we were delighted that the government listened to industry and listened to investors like us and ruled out and took zonal off the table.

We obviously had the draft determinations important. I'll come back to that in a second. And then we've also had the SSMC for ED3, where we saw a regulatory tone, which continue to be strategic and forward-thinking and progressive. And so from a policy perspective, that felt all quite good. Then on the ground, we've already referenced the progress we're making on consenting and indeed construction for transmission. And when we put all of that together, we thought now was the right time to come out with an exciting plan and show shareholders our thinking.

Just in terms of Ofgem discussions, of course, since that draft determination was published, we have been in good constructive discussions with Ofgem over the last 4 or 5 months. You'll recall the 3 themes, the 3 major themes that we were particularly interested in was the capitalization rate, the cost of equity and incentives and also the totex, the gap between our view of totex and theirs in that draft. Look, all I'd say is we've had good constructive conversations with the regulator, we think is -- understands the need to make networks investable and again reflect on the SSMC tone for that as clear evidence of that.

Then to your capacity mechanism question, this is -- firstly, I'd agree with you on the demand point. I think I've consistently played down some people's attempts to extrapolate a U.S. demand trend for the U.K. and Europe. I've always been much more careful about that. We are clearly starting to see constructive demand growth. And obviously, in the background, the government and NESO understand the need for capacity mechanism reform if they require new build peak thermal to accommodate that.

So those reform processes are going underway -- are underway. Obviously, you do have an example here. In Ireland, you've seen capacity mechanism prices, I think, up to certainly over EUR 175 per kilowatt as Ireland has had to contract for that same peak capacity to look after the nonlinear demand increases they've seen in that jurisdiction. So there is an example there of how the capacity mechanism has had to step in at a higher price.

What I've consistently said about the capacity mechanism is for new build, given the rises in CapEx that are ongoing for CCGTs, we think the cap will have to be reviewed. And for existing plants, just because of the age of it, and again, we referenced it in our presentation and the need to get spares in an inventory and make sure engineering capability and reliability are absolutely guaranteed. We expect capacity mechanism payments to have to at least stay where they are to accommodate those kind of needs. Effectively, the line I've used is before, it is difficult to be bearish on the capacity mechanism for its current price of around GBP 60 per kilowatt.

Your next question comes from the line of Pavan Mahbubani from JPMorgan.

Echoing congratulations on the launch of the strategic update. I have 2 questions on returns, please. So firstly, in Electricity Networks following up from an earlier question, should we take the confidence with which you've launched this strategic update as a confident message to the market that you now think you will achieve the 9% to 10% nominal returns in T3 that you indicated were a requirement to increase your investment there? That's my first question.

And my second question on a related theme in terms of renewables returns. Can you give us a reminder, you talk about your strict investment criteria, but particularly for offshore wind and for Berwick Bank. How should we be thinking about the key metrics you'll be looking at? Can you remind us what your IRR target would be for that sort of project, whether unlevered or levered?

Yes. So just to reiterate on the transmission question, look, again, to repeat, we are in constructive discussions with Ofgem. We don't know what's going to be in their final draft, which I believe is still expected to be the 4th of December. But we feel like we have been dealing with a strategically minded regulator who understands the need for this once-in-a-generation investment requirement to be investable. But we'll see what the final draft determination say -- sorry, the final determination say, I should say.

Yes, Pavan, look, on the offshore wind, our return expectations are the same as what we laid out in the summer, where we increased to an equity return of greater than 12%, and it is greater than 12%. And that also allows for the fact that in the underlying modeling we do, we obviously built in the lessons learned and the experiences we have from Seagreen and Dogger Bank. So we're quite comfortable in terms of the contingencies and the float within the programs there as well. But overall, greater than 12% equity returns.

Your next question comes from the line of Peter Bisztyga from Bank of America.

Two questions from me, please. So firstly, I was wondering if you could bridge a little bit the GBP 20 billion net CapEx plan in Transmission with your business plan. So how much of the kind of further future projects in your business plan have been excluded? Is there any kind of cost inflation in the ASTI and LOTI part versus that business plan? And is there any sort of upside risk to that GBP 22 billion CapEx if some of those future projects come through? And could that sort of pressure your balance sheet? So that's kind of question number one.

And then on your 225p to 250p guidance, just interested in some of the assumptions behind that. So for example, does it have that GBP 2 billion of unallocated CapEx in renewables spent fully unproductive? Or are you assuming some sort of return already on that in your time frame? And are you using the gross determinations sort of assumptions for your ED3? And I guess, ED3 -- or are you using something different in terms of where you expect the allowances for those businesses to end up?

Thank you, Peter. So look, I'll take those ones. In terms of the business plan, obviously, it was done over 12 months ago. And obviously, there's a couple of pieces here. One, they're on different basis. So this is obviously a 5-year plan to March 30. That was a 5-year plan to March 31. That also included OpEx and, obviously, Ontario Teachers part share in there as well. Of the uncertainty CapEx that we laid out in that business plan was GBP 9.4 billion. We have 10% of that in our current GBP 22 billion. So our GBP 22 billion is very clear.

GBP 20 billion is for the LOTI, the ASTI and the baseline CapEx. And then you have the GBP 2 billion, which is for your new connections and part of that uncertainty mechanism going forward. In terms of the assumptions behind the 225p to 250p, obviously, look, as Martin said earlier on, we had the draft determination. We had the benefit of 4 months discussions with Ofgem. We believe we've made sensible assumptions in the plan there.

In terms of other assumptions we made through the plan, we've made quite sensible assumptions. We've assumed inflation comes down to around 2%. We've assumed baseload power prices for merchant prices at the back end of the decade on average in the high GBP 60 area. Assumed cost of new debt 5% to 5%. So all quite sensible assumptions. And on the question of the unallocated renewables, yes, the bulk of that will be on earning towards the back end of the plan.

Got it. And sorry, just on the CapEx in transmission, do you see kind of any upside risk from those further future projects coming through that you haven't included in your plan?

No, we believe we've got a very robust CapEx plan with the visibility we have over the LOTI, in the ASTI, in the supply chain and our view on the uncertainty mechanism and what we've taken in there with a very robust plan.

Your next question comes from the line of Deepa Venkateswaran from Bernstein. Deepa, is your line muted? Due to no response, I will go to the next question. And your question comes from the line of Ajay Patel from Goldman Sachs.

Congratulations on the presentation. I have 2 questions, please. First is leverage. I'm trying to think about this picture by the time we get to 2030 and thinking, well, okay, more of the business, there will be less exposure to merchant. There will be a higher-quality business with more regulated proportion to it. And I'm just wondering, this 4.5x net debt to EBITDA that you're keeping below the plan, is there scope that, that threshold increases, giving you the opportunity to invest more at the end of the plan? And if that's the case, how does disposals fit into this?

If you saw that improvement in that threshold, would that be then -- would you need these disposals, I guess, would be the question. And then the second part was on the international renewables business. Given the reduced aspiration on the renewables side, does it make sense to have an international renewables business? What's the merits of having a business of this scale? I just wondered if you could revisit that for us, that would be quite helpful.

Yes. Ajay, yes, so look, on the leverage, as you said, yes, less than 4.5x net debt to EBITDA to the plan, keep us in line with our current credit ratings. Obviously, the investing 80% of our CapEx in networks is going to mean a big shift in our earnings and our earnings quality would probably go from networks being about 40% of our earnings to over 60% of our earnings by the back end of the plan. But clearly, that's their conversations for a different day with the agencies as that CapEx starts to get delivered and that earnings quality comes through.

If that does free up more capacity, clearly, yes, we will look at the disposals and what we would do with that capacity at the time. And the way the beauty of doing the equity today allows us to push those disposals towards the end of the plan and give us more flexibility and optionality around that.

And just on international renewables, I think, Ajay, we've consistently said that the vast majority of our time, effort, resources and focus is on our U.K. plan and our Irish plan. And given obviously what we've laid out today, that will continue to be very much the truth of it. We do still have development options, particularly in the Southern Europe geography where, obviously, we bought the SGRE pipeline several years ago, and we've got onshore wind that we can still develop and bring through.

So that remains kind of part of the plan. But absolutely, the majority -- the vast majority of the focus of Barry and I and the group is on delivering this once-in-a-generation organic opportunity in our home markets.

And sorry, can I have one follow-up just on that. When you weigh up the disposals, I know that 75% towards the end of the plan, and you haven't been specific if it's renewables or networks. But 3 years ago, you could sell network assets at real good valuations, you still can now. But -- and the aim was to reinvest it in renewables where you're making sizable premiums above cost of capital. And the emphasis has changed in this strategy, and I applaud it. But I'm just thinking if I'm looking at that GBP 2 billion bucket of disposals, what's the merit of selling down on renewable assets versus selling down on networks at this juncture?

Yes. So look, I suppose the key thing is no decision has been made. It could come from many of our businesses. Ultimately, we believe the distribution is a really attractive business, and we believe there's really good growth to come there in the next few years, and we certainly like to capture that. And all we're saying is that we have time to make that decision on what's the right thing for us to do strategically and financially, but we don't need to make that decision now. That's further down the road.

As we are approaching the hour, we will now take our final question for today. And your final question comes from the line of James Brand from Deutsche Bank.

Congratulations from me as well. Obviously, from the share price correction as well, investors are taking it extremely positively. So congrats. I'll stick with the 2 questions. The first one is on Berwick Bank. Can I just clarify that it's not included in the plan? Certainly doesn't kind of look like it is. I guess, in theory, it could be kind of an initial tranche. And if it does go ahead, does that have any implication -- so if you want a CfD, for instance, in AR7, would that have any implications for funding in the current plan?

Or is it the case given that obviously, it would take quite a while to get to the point of commissioning and also your model where you raise equity typically towards quite close to commissioning? Would it actually be falling outside the plan and if you want a CfD? That's the first question. And then the second question is on the GBP 200 million of annual efficiencies targeted by full year 2028. That's a bit better than the GBP 100 million you had in the old plan. And I guess from a starting point where you've already delivered some of those efficiencies. I was wondering whether you could give some details on where those efficiencies are coming from?

Yes, happy. I'll take Berwick Bank. So look, yes, so we've done quite a lot of scenario analysis and stress testing of the plan. And yes, we've made allowance for Berwick Bank in that part of that stress testing. I said earlier on, we have GBP 3 billion of uncommitted CapEx. Berwick is a multistage project, which obviously, we still don't know what stages the projects may win contracts at, what the timing for those are, ultimately, what equity stakes we hold on to. And clearly, any funding will be towards the back end of the plan. So that's all allowed for in that, and that's part of the scenario analysis we've done.

And just on the efficiency program, James, look, we said very clearly that we thought well, we don't take issuing equity lightly, and we thought that we had to make sure we've done as much in the business to make sure that it was efficiently run, and we're concentrated and focused on the key prospects and opportunities that looked ahead. We've spent a year going through a review.

We slightly rescoped some areas as a consequence. I mentioned earlier, we've actually been fortunate enough to redeploy some high-class renewable resource into transmission to help with that investment program. And of course, investors would expect us to be running an efficient business, and we've been very focused on delivering that, and that's reflected in the number that we shared with you today.

Thank you I will now hand the call back to management for closing remarks.

Well, look, thank you for your questions. And also thank you, Sharon, as the operator, for helping us run this session. It has been a pleasure to outline today the transformative growth opportunity we see ahead of us. And I hope that you share our sense of excitement for the years to come.

Thanks again to Sharon for, our operator, facilitating the Q&A, and thanks to everyone for joining us today. I look forward to meeting with many of you to talk more over the coming days. Thanks again.