Scotland-based energy company SSE agreed to sell its 33.3% share of Scotia Gas Networks (SGN) for £1.225 billion ($1.7 billion) as it cuts debt and focuses on low-carbon energy.
The Ontario Teachers Pension Plan Board and Brookfield Super-Core Infrastructure Partners purchased the stake in the pipeline network that supplies England, Wales, Scotland and the west of Northern Ireland. The pipeline group itself is also focused on sustainability, having committed to net zero by 2045 and, according to SSE, supports a transition to a hydrogen economy.
The deal completes a SSE disposals programme for non-core assets announced a little over a year ago. SSE will focus on its core low-carbon electricity business and electricity infrastructure. The company said it will provide an update on plans in November.
“We see significant growth opportunities in our core networks and renewables businesses in the transition to net zero, and the capital we are releasing through our disposals programme will help enable us to maximize the delivery of our low-carbon electricity orientated strategy,” Gregor Alexander, Finance Director of SSE, said in the release.
SSE seeks to invest in low-carbon energy infrastructure projects and triple its renewable electricity output by 2030, according to Reuters. The company said in May that it was investing £7.5 billion in low-carbon projects to 2025, according to the Reuters report.
The presence and role of natural gas has been divisive in transitions to lower emissions in energy.
Proponents of the fuel cite its cleanliness in comparison to oil and coal, existing infrastructure and affordability. It’s presence additionally allows for blending of hydrogen or eventual transport of the clean burning fuel.
Detractors brush aside the relative cleanliness of natural gas as a half measure since it remains a carbon emitter. Investment in gas development and maintenance is therefore simply putting cash in assets that will be stranded as opposed to supporting a transition.
“In SGN’s case, although it is well positioned to play a key role in the transition to net zero through development of the hydrogen economy, it was a financial investment, covering gas not electricity assets, with limited synergies to the rest of the group,” said CEO Alastair Phillip Davies, noting that SSE is currently building more offshore wind arrays than any other company in the world.
SSE rose at the opening of markets on the news before paring gains. Shares were up almost 1.7% during the day as other utilities fell.