SSE stock price gains 9% on a new £580m investment in giant wind project

SSE stock price gains 9% on a new £580m investment in giant wind project
  • SSE commits to a £580 million investment in the Viking Wind Farm
  • The farm will become the UK’s largest onshore wind farm based on the electricity output
  • Shares of SSE gained almost 9% to hit a 3-month high

Shares of SSE Renewables (LON: SSE) surged nearly 9% today after the Scottish company said it will invest £580 million in the Viking Wind Farm. As a result, the SSE stock price surged to 1400p to test the 3-month high. 

Fundamental analysis: A major investment in the mainland Scotland

SSE Renewables, the Scotland-based energy giant, made a final decision to invest £580 million in the Viking Wind Farm. The project, expected to be completed in 2024, is on course to become the UK’s largest onshore wind farm, as far as the electricity output is concerned. Viking Wind Farm, which will cover 17,396 acres, is expected to create 400 jobs. 

“Viking Wind Farm will help kick-start the green economic recovery, bringing much needed low carbon investment to Shetland. This project will bring benefits threefold for the island; harnessing its renewable potential, securing its electricity supplies for the long term, and helping decarbonise electricity,” said Jim Smith, managing director of SSE Renewables.

On the other hand, Alistair Phillips-Davies, Chief Executive, stated that his company is following up on promises with concrete actions. 

“It’s easy to talk about a green recovery, but we’re putting our money where our mouth is with £7bn of low-carbon infrastructure projects that can deliver a win-win for climate and economy.    

Moreover, SSE reported a 55% plunge in the full-year profits on a slump in electricity demand during the pandemic. The energy giant’s operating profit dipped 40% to £963.4 million from £1.61 billion the year before. 

Earnings per share plunged 67% to 40.6p for the year. SSE estimated that the impact of COVID-19 on its operating profit is between £150 million and £250 million before mitigation for the upcoming financial year.

Technical analysis: A 3-month high hit

SSE stock price traded, albeit briefly, above 1400p for the first time since early March. Shares of the energy giant surged nearly 9% today on the news that the company is committing £580 million to invest in the Viking Wind Farm.

SSE stock daily chart (TradingView)

The price action has closed above 1350p, which is a major resistance zone. This development is now expected to provide a boost to the buyers, who are looking to take the price action to 1450p, which is a 61.8% retracement of the big move down. 

Summary

Shares of SSE surged almost 9% to hit 1400p for the first time since early March. Scottish company made a final decision to invest £580 million in the Viking Wind Farm, which is expected to be completed in 2024.

By Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to Invezz. His passion has given him first hand experience of trading, while his writing means he understands the market forces and wider regulation.
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