Good morning, and thank you for joining us for this presentation of our interim results for the 30th of September, 2023. I'm joined for today's presentation by Gregor Alexander, who's pre-presenting his 43rd and final set of results as Finance Director, Martin Pibworth, our Chief Commercial Officer, and Barry O'Regan, who succeeds Gregor as Chief Financial Officer later this month. I'd like to start with a few words about safety, which is always SSE's primary objective. As we continue to deliver our strategy to provide energy that is cleaner, homegrown, and secure, construction activity has increased, which, in turn, has driven an increase in our TRIR measure in the first half. We are continuing to invest in new initiatives, including the launch of an immersive training program to enhance our existing sector-leading safety controls as we redouble efforts to address this drop in safety performance.
Finally, I'd like to pause to pay respect to Richard Ellis. Richard was an employee of one of our contractors who sadly lost his life in a tragic accident on a public highway in Sussex last month. Our thoughts go out to his family and friends. Over the next 40 minutes or so, we'll explain how greater visibility of SSE's growth options is underpinning a fully funded update to our CapEx plan and how the reliability of earnings from our balanced business mix is giving us added confidence in our guidance. Our underlying strategy is built on the fact that networks, renewables, and flexibility will be the bedrock of a future energy system with electricity at its heart. As we move into a U.K. general election year, it is clear that policy and delivery in each area will not always move at the same pace.
But the imperative to simultaneously secure affordable energy supplies while tackling climate change remains firm. Alongside an increasing desire to deliver jobs and industrial growth, this results in a societal trend and political consensus that remains very solid. That's why we've positioned SSE at the heart of the energy transition, able to fine-tune our investment plans across the electricity value chain. And you can see this in action today. Just six months on from upgrading our Net Zero Acceleration Programme, we are increasingly confident in our ability to deliver the earnings we've promised this year and double-digit growth through the five years of our NZAP+. We're delivering on a fully funded capital investment program that is investing around GBP 10 million a day across the plan in critical national infrastructure. And within this, as we'll explain shortly, growth in networks is coming through even faster than we anticipated.
We're driving long-term sustainable earnings growth with our balanced mix of index-linked and market-based businesses that have demonstrated both their resilience and ability to capture upside when conditions are favorable. We have the proven financial discipline and optionality to invest in opportunities only when the value proposition is crystal clear and it meets returns expectations. Dogger Bank made global headlines last month when it exported its first power, but the world's biggest offshore wind farm is just one entry in a roll call of highly complex major projects that we are progressing at pace. Seagreen is now fully operational with the capacity to power 1.6 million U.K. homes, and Viking has all of its turbines now in place. These projects provide meaningful progress towards our ambitious growth targets.
They complement our existing portfolio of assets, and they will enter a market where power prices are expected to be higher for longer than originally anticipated. At the same time, growth opportunities are being realized in networks with greater visibility of future growth and transmission, making it one of the fastest-growing networks in the world. We now expect GBP 2.5 billion of additional fully funded CapEx to be invested in the business, which I will talk through later on. This means the group's CapEx forecast is now GBP 20.5 billion across the five years to financial year 2027. This revised outlook demonstrates the accretive opportunities that continue to emerge from the transition to net-zero, most notably in the near term for transmission and renewables, which comprise around 70% of our investment to financial year 2027, but also for the distribution and thermal businesses as we look further out.
This blend of alignment to societal trends, high-quality investment options, and increased availability, increased visibility is driving confidence in delivering our shareholder returns. The group offers stability, reliable returns, and natural hedges. Networks and renewables businesses are highly complementary electricity asset businesses with similar growth characteristics and combined financial strength. We then have further synergies and optionality from our energy businesses with our own mix of stable revenues and built-in flexibility. With this mix and our revised spending plans, we now have greater confidence that we will be comfortably within the GBP 175-GBP 200 target guidance range for financial year 2027. This is underpinned by our business's significant indexation to inflation and our strong balance sheet, with the vast majority of debt held at fixed rates.
We are seeing strong returns today from an existing portfolio of world-class assets, which are continuing to grow as major projects such as Seagreen reach production. We're also building more world-class assets that will continue to deliver step-ups in earnings, with our diversified pipeline promising far more value to come over the decade and beyond. The worldwide transition to net-zero is unstoppable, but that's not to say that we should throw caution to the wind. In the recent market environment, SSE's customary discipline has never been more important. Take the recent AR5 offshore auction round in the UK. Here, we decided to hold back from an offshore process that did not meet our investment criteria but were fully rewarded with over 600 MW of onshore contracts secured at a 13% premium to AR4 prices.
The message is clear: where contracts don't offer the right returns or where seabed can't be secured for the right price, we will maintain discipline. We have the flexibility to dial up our capital allocation and prioritize investment to the asset classes that offer the best returns in the prevailing market conditions. And right now, as we look across the clean energy value chain on a risk-adjusted basis, continuing to upweight our investment in regulated networks feels like the right course of action. I'll now hand you over to Gregor.
Thank you, Alastair, and good morning, everyone. With this being my final results presentation for SSE, I'm pleased to be able to talk you through such a strong set of half-year numbers. Looking at the breakdown across the segments, around 50% of adjusted operating profit was driven by our regulated networks businesses, with around 30% from energy generation and gas storage, and the remaining 20% from our customer businesses. I'll run through the financial performance for each of the businesses in due course. However, it is clear that our networks businesses have continued to perform well, while our renewables and thermal businesses have demonstrated their portfolio value in the current market environment. Overall, at the group level, you can see the stability benefits of a balanced business mix in a consistent set of numbers despite the dramatically different market conditions from a year ago.
Adjusted operating profit decreased by 3% to GBP 693.2 million. Adjusted profit before tax increased by 1% to GBP 565.2 million. Adjusted earnings per share was GBP 0.37, well above pre-close guidance due to stronger operational performance combined with a lower effective rate of tax. This result reflects the normal seasonal nature of operations that deliver the majority of annual earnings in the second half of SSE's financial year. The success of our longstanding hedging approach has been clear over the last two years. As reduced exposure to short-term commodity price movements has meant our businesses have delivered strong profitability despite unpredictable markets. At times, this approach has driven significant gains or losses through unrealized fair value movements, which are unrelated to underlying operating performance. However, in this period, there has been minimal fair value movement, with forward commodity prices holding at more stable, albeit elevated levels.
As Martin will elaborate on later, the acquisition of Triton Power has been an unqualified success. In the 13 months since acquisition, it has already generated over GBP 130 million of cash, thereby paying back more than our original GBP 123 million cash consideration. However, as these strong cash flows have been realized by Triton, it has triggered a technical non-cash impairment in the carrying value of this asset during the period. This impairment reverses previous non-cash valuation increases, and Triton remains a value-enhancing acquisition that will be profitable on a cash basis going forward. Turning to SSEN Transmission's performance, adjusted operating profit increased by 3% to GBP 215.6 million, mainly driven by increases in allowed revenues under RIIO-T2, together with a positive timing impact from tariffs. As the business continued to deliver asset growth, this increase was partially offset by additional operational costs, including a higher headcount and depreciation.
SSE's distribution operating profit is down 31% year-over-year to GBP 120.1 million. As we highlighted in May, this is attributable to continued inflationary pressures and increases in the cost base, not being reflected in the tariffs for the regulatory year, which were set in December 2021. While the timing of the distribution tariff setting process means that allowed revenues are not expected to keep pace with inflation this year, this is a timing difference that will reverse in the financial year 2025 as tariffs are updated for the current cost environment. In renewables, adjusted operating profit increased to GBP 86.8 million as the business saw year-over-year benefit from higher average hedge prices combined with lower levels of hedge buybacks required.
While profitability has increased, renewables performance remains below our expectations at the start of the year, mainly due to exceptional weather conditions with output around 19% behind plan for the first six months. This represents around a 7% shortfall to the full year's planned output. Despite this summer delivering the second lowest summer seasonal spark spread on record, our flexible thermal fleet returned a record half-year profit. With the benefit of capacity additions from Keadby 2 and Triton Power and improved year-on-year availability, our efficient fleet was able to achieve strong generation capture prices while also using our flexibility to optimize our market positions. Meanwhile, as flagged in the pre-close statement, a more stable market environment has driven a seasonal half-year loss for gas storage. We anticipate that this will revert to a strong profit of more than GBP 75 million for the full year as gas is withdrawn.
Turning now to our other businesses, SSE Business Energy recorded an adjusted operating profit of GBP 88 million, which reflects the phasing of customer contract margins in competitive conditions. SSE Airtricity recorded a small profit in the period. At the year-end, in more benign market conditions, we expected to return to more normalized earnings, having decided to return profits last year to customers in recognition of the cost of living crisis. Our energy portfolio management business, now known simply as SSE Energy Markets, delivered an adjusted operating profit of GBP 9 million in the period, reflecting improved market stability. And finally, losses from SSE Enterprise and Neos Networks continued in the period as they build out their respective asset bases. Investment levels remain at higher than historic averages, reflecting the range of delivery across the group.
Excluding the acquisition's last half-year of the Southern European Onshore Development Platform and Triton, the GBP 1.1 billion we have spent this period is in line with our run rate last year. Almost half of this investment has been spent on regulatory networks as transmission delivers on existing large capital projects such as the Shetland HVDC, while distribution progresses with delivery of the ambitious RIIO-ED2 price control. An enormous equal amount has been spent on our renewables projects, with in-flight projects such as Seagreen, Viking, and Yellow River receiving increased levels of investment. SSE's strong balance sheet continues to be underpinned by high-quality assets and disciplined investment in long-term infrastructure. In September, we successfully issued a EUR 750 million euro 8-year green bond at a fixed coupon of 4%, placing SSE at the top of the U.K. corporate league for green bonds.
Adjusted net debt was just below GBP 9 million, with over 90% of financing still held at fixed rates and at an average debt maturity of around six years. Our credit ratings continue to compare favorably to our peers, reflecting the resilience of the business mix and its ability to create value while paying dividends. Meanwhile, our pension schemes remain in surplus. Our cash collateral is comfortably within existing facilities, and we have good liquidity. This strong financial footing provides the foundation for the NZAP+ investment plan and delivery of high-quality projects that create long-term value for the group. As Alastair said, after 33 years with the company and 21 years as finance director, this is my last results presentation. I would like to express my thanks to my many colleagues, investors, and others past and present who have so ably supported me during my tenure as finance director.
I'd like to thank particularly Alastair, Martin, and Barry for being part of a great team. It's been an absolute privilege and honor working for SSE and playing my part in progressing a purpose, culture, and heritage that has become a driving force behind net-zero. I will clearly miss it, but I'm delighted to be continuing my association with SSE in my role as Chair of SSEN Transmission and as a board member of Neos Networks. I'll now hand you over to Alastair for the networks part of the operating review.
Thank you, Gregor. Before I move on, I'd like to pay tribute to Gregor. In a career that has spanned 33 years at SSE and 21 of those years as our finance director, he's made a huge contribution to the company from the original merger and through a number of transformations and chapters, some challenging but all of them moving SSE forward. Throughout, he has done so with considerable skill, professionalism, and humor. He's demonstrated enormous energy and enthusiasm for the business and especially the people in it. I've found him an outstanding colleague. All of us at SSE wish him well in his retirement. Transmission is playing a critical role in unlocking the exceptional renewable resources in the north of Scotland. The business is halfway through the RIIO-T2 price control out to financial year 2026.
Good progress continues to be made on all major projects within the base plan. This includes the first energization last month of Kintore Phase One, part of the Northeast Scotland upgrade, and successful installation of the towers for the Inveraray to Crossaig overhead line. Elsewhere, the Shetland HVDC transmission link also continues to make excellent progress with the entire 260 km of cable now installed. The project is well on track for energization in 2024. Looking to the current project pipeline, all LOTI projects have now been granted approval of need by Ofgem, and the creation of the ASTI framework is a game changer. Critically, this process allows early supply chain engagement and vital upfront community engagement to occur ahead of planning submission. All eight of SSE's ASTI projects are in different stages of development, as you can see on the slide.
The most advanced of these projects is Eastern Green Link 2, or Eagle Two, as we like to call it, which will see a 2-gigawatt HVDC subsea link connect Peterhead to Drax and relieve constraints in the network. As you would expect in the current climate, we are seeing increases in delivery costs through the project assessment and refinement stages. For example, SSE's share of Eagle Two, which is a joint venture with National Grid, is now expected to cost over GBP 2 billion, owing to a combination of supply chain inflation and project specification changes. While we'd be wrong to read this magnitude of increase across to all projects, our latest estimates of nominal gross spend to deliver our three LOTI projects are around GBP 3 billion, while our ASTI projects are expected to cost around GBP 17 billion.
With Scotland's resources making it the natural home of so much renewable investment, it is critical that we deliver the wider benefit that will come from this government-approved vital infrastructure in a way that recognizes the views of the communities who will host it. We're consulting widely and continue to call for an ambitious approach to community benefit funding to help ensure an equitable distribution of cost and benefit between those using the output from the infrastructure and those hosting it. Clearly, the connections to be constructed under ASTI and LOTI are significant infrastructure projects requiring investment, which is expected to be phased over a number of years spanning out beyond the five-year plan.
Nearer term, as a result of these revised cost estimates, we now expect adjusted net CapEx for transmission of around GBP 7.5 billion across the five years to financial year 2027, with the increase since NZAP+ weighted towards the outer years of the plan. We've also increased our RAV outlook to financial year 2027 from between GBP 8 billion to GBP 9 billion to at least GBP 10 billion gross on a nominal basis. As there's likely to be further growth beyond the period of the plan and into the next decade, the ASTI framework delivers on the projects identified by the system operator's holistic network design, or HND, as needed to enable 2030 offshore wind targets.
The sequel to the HND, the HND follow-up exercise due early next year, is expected to outline the strategic network that bridges the current design, which consists of 11 GW of Scottish wind, to one that connects 28 GW. We see potential for enormous growth, but until any new models and plans are confirmed by Ofgem, our focus remains on delivering the investment and RAV growth that we have increasing visibility over through the LOTI and ASTI frameworks. We were pleased with positive signals on simplification and streamlining of regulation in Ofgem's recently published decision on the Future System and Network Regulation Framework, which is an important first step in the next price control review process. We also welcome the amendment of the regulator's existing duties to include reference to net-zero targets from the passing into law of the Energy Act 2023.
We'll work constructively with Ofgem to ensure the future regulatory framework enables us to deliver the network infrastructure needed to secure the country's future energy independence and fully decarbonize our economy. In distribution, we bring net-zero to the doorstep, and we believe that more localized grids, which SSEN Distribution operates, will need the same kind of forward-thinking regulatory support that has helped get the necessary long-term strategic investment in the transmission network. There is sufficient flexibility within the RIIO-ED2 price control to create additional value and ease constraints for uncertainty mechanisms. And that is what we are seeking to do with targeted strategic investment on the Isle of Wight, for example. Distribution may not have the megaprojects of the other businesses, but there are many, many smaller investments that compound up.
We are making progress with the GBP 3.6 billion baseline plan, with the potential for up to GBP 700 million of additional funding through uncertainty mechanisms. The business is also making good progress improving operations, with the fastest improving DNO for customer service, and we're accelerating procurement to get ahead of the supply chain. We also have a new divisional finance director and a promising transformation project underway. We believe distribution is increasingly becoming fit for the future, but as I've said, to fully play its part in enabling net-zero, we'll need more of the longer-term strategic thinking that Ofgem has already applied to transmission. I'll now hand over to Martin to cover the energy businesses.
Thank you, Alastair, and good morning, everyone. The trends driving the strong growth of our business are undeniable. Around the world, renewables will be the engine of decarbonization. Cheap, local, and indigenous, any future energy model in any country has them in abundance. While different renewable technologies complement each other well, their increased deployments will create a greater need for flexibility, be it from older gas plants, hydro and batteries today, or carbon capture and storage, biofuels, and hydrogen as we move through the decade. At SSE, we have the UK's premier renewables portfolio and arguably the most flexible large thermal fleet operating in tandem with it. This portfolio means we can weather a low-price environment or equally perform well commercially in a higher-price environment, particularly one where volatility exists. It's worth reiterating how this plays out and why confidence in our longer-term earnings profile is growing.
Firstly, while our baseload power price assumption in FY27 is GBP 85/MWh, this remains conservative compared to current forward prices, with new assets such as Seagreen landing into a more supportive price environment than envisaged when the final investment decisions were taken. This comes at a time when U.K. carbon prices are underperforming compared to their European equivalents, which we feel is unlikely to persist in the longer term. Secondly, we have the benefits of flexibility across our portfolio. In the last three years, we've had periods of low wind speeds that have created very high power prices, and we've also had times when there have been negative power prices when the weather shifts and more renewables are running. Our portfolio means we have been able to capture value whether the wind is blowing or not. The interim results demonstrate that point clearly.
As renewables output was affected by unseasonable weather, thermal flexibility provided the cover and captured considerable value. Indeed, with markets now used to volatility and planning for it, participants buy our flexible energy in advance to cover their positions. This then opens up the option for us subsequently to reoptimise ahead of delivery. In short, our flexibility has flexibility built into it. Along with our gas storage flexibility and our first battery projects now coming through, we are very well set for the next decade. Since announcing full-year results, SSE Renewables has made significant progress against its plan. Dogger Bank A produced power for the first time last month, and a week later, Seagreen was fully operational. While there have been delays on both, that is to be expected for complex, first-of-a-kind major infrastructure projects.
Critically, the teams have worked hard to ensure that any additional costs have been minimized within existing project contingencies. Viking was among our onshore wind projects that recently received CFD support of over GBP 52 in 2012 prices, and construction work has begun at Yellow River in Ireland, which now has a RESS contract. Further afield, where we anticipate returns beyond the five-year plan, we are making progress constructing the Chaintrix project in France, and a southern European team are seeking selectively to add to the portfolio. Work continues at pace on building out our battery fleet, with our recent announcement that we have taken a financial investment decision on one of the UK's largest batteries at Monk Fryston, while similar projects are already under construction at Salisbury and Ferrybridge. The delivery of flexibility of a different nature continues as we make good progress repowering Tummel Bridge Hydro.
In short, we have focused on delivery, kept our heads in auctions, and maintained discipline while selectively securing long-term value through offtake agreements where available. Ultimately, if we feel we can achieve better risk-adjusted returns in networks or flexibility, we will not put through suboptimal renewables projects to reach gigawatt targets. And this does not impact our confidence in achieving our NZAP+ earnings targets, as it is the assets we are contracting, constructing, and delivering today that will drive the majority of the earnings growth to financial year 2027.
There's a lot of detail on this slide, which I don't propose to read through now, but suffice to say that our flagship projects have strong fundamentals, index-linked revenue agreements, and a stable cost base which was largely locked in when we took final investment decisions between 2020 and 2021, all of which means we continue to expect to achieve near double-digit equity returns on Seagreen, mid-teens equity returns on Dogger Bank, and high single-digit project returns on Viking. All credit to the project teams for their work in getting us to a place where we have much to celebrate. Taking all this together, we expect that there will be a sharp rise in output to FY27 as our flagship projects come online. Our recent offtake contract successes mean SSE Renewables has a growing proportion of contracted indexed volumes giving relative pricing certainty.
With a strong mix of attractive power prices, indexed contracts, and its own flexibility through hydro pump storage and batteries, we remain confident in our expectation that EBIT for this business will grow by around 20% on average each year to FY27. We believe the longer-term future of our thermal fleet is in carbon capture and hydrogen. And while policy mechanisms are being progressed, we are on record as saying we are disappointed that there is currently insufficient ambition to support multiple projects quickly enough. The reality is that the U.K., in particular, will need to progress clean flexibility much faster than we are at present. And with aging and more polluting stations on the system, more efficient gas and biofuels are becoming an important bridge to ensure secure supplies and to enable renewables at greater scale.
2 is the most efficient gas-fired power station in Europe and has already started to provide valuable flexible power to the system. We acquired Triton Power at an opportune time, the cash generated by the assets having already paid back our initial outlay. SSE's flexible thermal fleet is set to provide value for years to come as we make it more efficient and then replace the assets with decarbonized alternatives as and when policy allows us to. Speaking of value, there are some positive trends that I don't think are always fully appreciated. There's a traditional view that returns for our CCGT fleet are entirely dependent on the intrinsic value of prevailing market baseload spark spreads, which are uncertain, unbankable, and exposed to the variability of international energy markets or trends. This is outdated and ignores several constructive trends supporting the fleet.
Flexibility has clearly become a more prominent feature in the markets, demonstrated by the capacity mechanism, which is underpinning more than GBP 300 million in thermal's FY27 revenue. But this is not the only structural change in the markets. As the level of intermittent renewables increases, the natural variability in wind speeds is increasing the volatility of spark outturns. Historically, spark spreads traded in a daily range of maybe at most GBP 20 a MWh. More recently, the day-to-day difference between a very windy day and a still colder day might be over GBP 100 a MWh. Put simply, high wind production levels create a surplus of power and usually negative spark returns, whereas low wind creates a scarcity of supply and at times very strong price signals. In this volatility, the flexible thermal fleet stabilizes the market.
When prices are low, the fleet can buy back its hedged positions and reduce the surplus on the system by not running. Conversely, when prices are high, the fleet can ramp up production to meet demand. Ultimately, flexible thermal reduces the impact from renewables' intermittency, covers the plant failure risk that can come from volumes imported across interconnectors, and aids the management of localized system imbalances. For SSE, the capabilities of our fleet give us the options to create value whether the spark prices are positive or negative, high or low. The option can be traded in forward markets and then reoptimized and offered to grid operators as an intraday physical response. And these earnings are underpinned by the stability from already secured, largely index-linked capacity mechanism income, which helps protect us from O&M's supply chain inflation.
We value these assets very highly indeed, and our portfolio value to the group is immense. I'll now pass over to Barry, who will take you through our wider financial outlook.
Good morning, everyone, and thank you, Martin. Special thanks to Gregor, not just for his support and guidance over the years, but also for passing on an impressive legacy and a resolute commitment to delivering disciplined growth that I wholeheartedly share. Let me be clear. I firmly believe that only value-creating growth should make it through our governance procedures. Maintaining attractive returns from our world-class capabilities and pipeline is imperative. This means prioritizing value over volume, as we did recently in AR5, the ORESS process in Ireland, and other international seabed auctions. Our integrated business mix allows risk mitigation and enables us to be selective in the routes to market we take to progress individual projects. We have been able to progress Viking, Yellow River, and Seagreen in this measured way, capturing revenue stabilisation where it meets hurdle rates while de-risking returns.
We are committed to taking this disciplined approach with new technologies too. We see a critical role for forms of low-carbon thermal, such as hydrogen and carbon capture and storage, and pumped hydro storage and batteries. But our commitment to DevEx is measured, and clearer signals are needed on supportive policy frameworks before we invest at scale. With a wealth of opportunities, we must remain focused in selecting the most accretive projects to take forward. As I said, we will always choose value over volume. Turning to the remainder of the current financial year, I am today reiterating our full-year guidance of more than GBP 150 for adjusted EPS. This takes account of renewables performance, the power price environment, and the ongoing contribution made by our flexible thermal fleet. It is also subject to weather, plant availability, and market conditions as we move through the key winter months.
But following strong performance in the first half of the year, our business-by-business operating view remains unchanged. Switching to our medium term, the increased visibility we have of our growth options and the value coming through our asset base gives us greater confidence over our outlook. This is driven by the progress of our major projects, the higher power price environment, and the portfolio effect from our asset base that Martin discussed. It is also underpinned by the large proportion of stable revenues across the group, be they from regulated networks, CFD renewables, ROCs, or capacity payments. This means much of our future earnings are protected, predictable, and deliverable from our existing asset base. Importantly, this means our guidance is based on existing and contracted projects and is not contingent on the acquisition of additional seabed or assets.
Our underlying assumptions on factors like funding costs, power price, normalized weather, and plant availability remain unchanged. This position, alongside the GBP 2.5 billion of further investment in transmission we've outlined today, drives greater confidence we will be comfortably within our GBP 175-200 guidance range for FY27. The NZAP plan set a dividend policy out to FY27 that enables disciplined growth of the group while rewarding shareholders appropriately. The rebasing to GBP 0.60 in 2024 remains an integral part of that plan, and we reconfirm the commitment made in the NZAP+ to grow the dividend by 5%-10% annually out to 2027 while keeping the 25% cap on scrip. Alastair talked earlier how we have the optimal balance of renewables, networks, and flexibility, giving us the ability to fine-tune capital allocation.
In November 2021, we set capital allocation across the group to reflect our evolving portfolio and greenhouse gas emissions targets. Then, in May of this year, we tweaked the ratios as part of our NZAP+. We're a business that can respond to policy pace. And with current policy direction, meaning that networks are currently running faster, we have made further adjustments accordingly. We have yet again acted to increase the CapEx invested across our primary engines of growth, with regulated networks upweighted to 55% to account for greater visibility on the transmission investment opportunity. The phasing of this incremental CapEx will be loaded towards the back end of the investment programme, but we are comfortable making that commitment in the current environment given the strong, predictable regulatory frameworks in place that mean real equity returns are expected to be stable relative to inflation.
SSE has a strong financial footing that provides the foundation for the NZAP+ investment plan. We have a track record of successful refinancing in the market, and with a world-class set of assets and businesses, we are confident of continuing to secure funding at attractive rates. With less than GBP 1.5 billion of long-term debt maturing over the next 24 months and an average debt maturity of six years, we have relatively limited refinancing requirements in the near term. It is this balance sheet strength, combined with headroom on our current investment-grade credit ratings, that provides us with the ability to invest further in our engines of growth when the opportunity appears. A key objective of the original NZAP was to strike the right balance between capital investment, debt issuance, and securing value-true disposals whilst maintaining a strong net debt-to-EBITDA ratio, and today's update is no different.
On this slide, we have set out our updated funding plan over the five years to 2027. We are expecting to see an increase in interest rates over the plan, but given the increased investment and the current market environment, we forecast that this will be more than matched by operational cash flows from our index-linked asset base. The GBP 2.5 billion net increase in capital investment is therefore expected to be funded through the additional issuance of around GBP 2 billion of new debt, predominantly weighted towards the back end of the plan. However, given the increased visibility and confidence we have in our earnings growth, we continue to expect that we will stay within our 3.5-4 times net debt-to-EBITDA leverage target within the updated plan. It, in turn, is well within our strong investment-grade ratings target.
To conclude, we have highly visible growth opportunities, a fully funded GBP 20.5 billion investment plan, increased confidence in our outlook, a growth-enhancing dividend policy, and capital discipline that favors value over volume. This is the solid financial framework on which SSE's strong growth and sizable contribution to net zero is being built. I will now hand back to Alastair to summarize before we take your questions.
Thank you, Barry. I mentioned at the start that networks, renewables, and flexibility will be the bedrock of a decarbonized economy, and this slide shows the steps that SSE can take to reach a sustainable future energy system that is cleaner, more secure, and more affordable. Investment will be flexed depending on returns, policy support, and the pace of consent, but SSE is there every step of the way. Ultimately, everything we have in the plan will need to be built at some point if government net zero targets are to be met. As you've heard this morning, for us, it is all about fine-tuning investment to maximize the value we can create not only for shareholders but for society too. End-to-end exposure across the clean energy value chain, balance sheet strength, exceptional optionality and capability, visibility of sustainable earnings growth—these are the constituent parts of a compelling investment proposition.
It is a proposition underpinned by shareholder-backed science-based targets, a sector-leading strategy for a just transition, solid ESG index ratings, and broad societal consensus on net zero. The targets we set out in May were only ever a floor, not a ceiling, to our ambitions, and whilst our targets remain and we are confident in attaining them, we will not meet them at the expense of appropriate returns. Adjustments will continue to be made. Networks have long been an underlying driver of value creation for SSE, and that value is even clearer now. Our updated targets therefore reflect the prospects we see for transmission and the corresponding shift in capital allocation. For a long-term business like SSE, it is all about sustainable, high-quality, value-accretive growth.
To summarize what we've outlined today, we are an electricity company experiencing what looks set to be an extended period of higher power prices, market volatility, and cost inflation. Our business is built to not only weather all environments but deliver attractive growth. The delivery, drive, and discipline that we have been talking about is the NZAP+ in action. Delivering on large capital projects, driving earnings from existing assets within our world-class portfolio, and applying discipline to the way in which we exercise our optionality across a balanced mix of regulated and market-based businesses. This gives us heavy confidence in the guidance we've given for earnings growth for this year and beyond to financial year 2027. We'll now be delighted to take your questions.
Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star one one on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star one one again. Please stand by while we compile the Q&A roster. This will take a few moments. Now we're going to take our first question. Just give us a moment. It comes from the line of Sam Arie from UBS. Your line is open. Please ask your question.
Excellent. Thank you very much. Good morning, everybody. Let me just start by saying congratulations on the great set of results and also congratulations to you, Gregor, and thank you for everything you've done in recent years. It's been a great pleasure working with you, and we wish you all the best for the next chapter. Let me go on to my question quickly, perhaps in two parts, and I think maybe in contrast to each other. I think part one was I wanted to ask about your guidance for the rest of this year. You've obviously posted a very good first half. And if I think about the weather so far in what we've had of the second half, I mean, there's been a lot of wind, a ton of rain in Scotland. I'm sure the renewables outlook looks good for H2.
I noticed on page 8, I think it is of your slides, that you shaded in an EPS range for the full year that it looks like I don't want to over-interpret the chart, but it looks like at some point it could go higher than even the 166 from last year. So I fully understand you're not changing your guidance right now, but I just wanted to ask, how do you see the chances of a full-year number for FY24 that's actually in line or higher than last year's very good number? Is that a remote outlier or maybe a 50/50 chance at this stage? Then, apologies, that's just the first part of the question. The second part is if we look ahead to the rest of 2024, I suppose the economists are getting a bit nervous about a UK recession.
I know you have a lot of hedging in place, but I guess a major slowdown in demand combined with very strong renewable supply could have quite an impact on prices. In a recession, you might get timing effects on the grids and so on. So I just wondered if you could share a comment on the potential impact of a UK recession, if we get one, on your guidance framework and whether that would put it at risk in any way or if you feel comfortable with your guidance, whatever the economic weather? Thank you.
Okay. Yeah. Look, well, I'll let Barry deal with that. It's certainly been pretty wet and windy up in the north of the country since the start of October, but I'll let Barry comment on the first part of that, and then I'll take a bit of the UK recession, maybe Martin will as well.
Yeah. No, look, thank you, Sam. And look, I think as ever, there's a lot of moving parts here. We still have the key winter months to come. As you look out, in average, we normally make around 20%-30% of our full-year profits in the first half of the year. So clearly, there's a lot to happen over the rest of the year. Obviously, clearly, our results are subject to plant availability, normal weather, etc. So at this stage, I certainly see no reason to change the guidance from above 150p from that perspective. And in terms of the wet and windy, yeah, clearly, if it continues to be wet and windy, that's good for renewables. Obviously, that means in terms of the thermal business Martin outlined earlier on, there's clearly opportunities to trade in around that as well. So that makes spark spreads a negative.
Overall, we reiterate our confidence in greater than 150p.
I think the colouring-in section of the finance department may well have put a number that's north of 166. So therefore, it must be true that it is possible, but what we remain confident in is exactly what Barry said. We'll get north of 150, and we'll obviously be looking to deliver all we can. There is a little bit of volatility in the portfolio. Regardless at a high level, things like networks, if I comment on that, and Martin can comment on the Energy businesses. Networks, by and large, locked in. There are small variations for volumes, but I think we've given clear guidance on where we see that being. If volumes dropped off heavily in the winter, that may have a small impact, but I think it would be pretty minor for anything there.
We might see something coming out of that in future years, but again, I think there's strong growth across those networks businesses, and we would still remain confident, certainly in respect of those businesses, that would be good for this year and would be good out to financial year 2027 as well. Martin.
Yeah. Just hi, Sam. Just on kind of the macro economy, I mean, obviously, demand has been reduced post-COVID and also as part of just natural elasticity responses to price. So we haven't seen any kind of further deterioration in demand, if anything, a slight build maybe, although it's difficult to read through the pictures. Obviously, our portfolio is robust. We've talked a lot this morning about the importance of Capacity Mechanism payments and some of the government contracts we have, so that gives us protection against some of the volatility. But also, we've made the point that regardless of whether prices are low or high, the thermal fleet's ability to respond to the natural intermittency on the system creates value as well. So on that basis, I'm pretty comfortable that we're okay against the macroeconomic picture.
Okay. Thank you.
Very good. Thank you so much.
Thank you. Now we're going to take our next question. Just give us a moment. The next question comes from the line of Rob Pulleyn from Morgan Stanley. Your line is open. Please ask your question.
Hi. Good morning. Good morning, gentlemen. And congrats to Gregor on quite a stint, I think it's fair to say. We shall all miss your insights on the sector, the market, and obviously your help on SSE. Two questions, if I may. The first one, the emphasis on renewables returns is very welcome, I'm sure. And SSE obviously is in a very nice position in having other investment options. But to clarify, should we interpret your repeated reiteration of this discipline as inferring that renewable returns are not appropriate in the opportunities you currently see? And the second one I'd like to ask to sort of lift the cover a little bit. How much debate do you have on the dividend policy? Obviously, you made a change a few years ago. Since then, the interest rate environment has changed, and the balance sheet strength has changed.
If you could elaborate a little bit around the deliberations you have there, that would be fantastic. Thank you very much.
Okay. So I'll let Martin comment on where returns may go in renewables. I think our actions this year and what Barry's outlined, it's just been clear about what we saw in recent times. Returns haven't been enough for us to bid Arklow into one of the auctions. In AR5, we were tremendously successful in the offshore sorry, in the onshore piece of it, but didn't get anything in the offshore piece of it. That's just been the history of what's there. I think equally, we've seen governments learning from that. There was a recent auction in New York where a number of contracts, which hopefully will have been bang up to date, seem to have cleared and cleared at prices over $140.
Obviously, over in Ireland as well, we've seen some of the auctions there, the RESS auction, again, that Barry referred to, where we won a contract clearing above prices that we've seen historically. So I think if I look back, we've just shown discipline where there haven't been the right returns, and we've happily picked up assets where there have been the right returns. But otherwise, Martin?
Yeah. So I think that pretty much covers it, actually. I mean, in AR5, we were clearly successful in 600 MW of onshore wind, so the return was appropriate. We were unsuccessful in Arklow. We held our capital discipline there. That implies we needed a higher price to be successful. That didn't happen, so we didn't take a contract there. I mean, looking forward, I guess we think we've got a number of very valuable portfolio options that are entirely consistent with our NZAP+ strategy, but also the net-zero need of the electricity generation system. And our expectation would be that the government will stick to its plans for offshore wind. There's an LCP report, actually. It's coming out this morning that talks about 25 GW of offshore wind being required through AR6 and AR7 to keep on track for those ambitions. That's probably a number that we'd probably recognise.
We see our pipeline as part of that, but only if we get the right return against the supply chain costs and CapEx we're seeing out there.
And Barry?
Yeah. Look, hey, Rob, on the dividend question, look, we're seeing an increasing number of highly visible and attractive options to invest in across our portfolio. And you've seen that again today with the upweighting in the transmission piece. And personally, I believe it's very important we maintain a strong balance sheet that allows us to be nimble and take opportunities as they arise. We saw that 13 months ago when we bought Triton, and that's paid itself back already. So that's important. Leverage levels look low now, but you've seen in the slides, CapEx picks up towards the back end of the plan. So it's important that we retain that balance sheet strength to support that growth. And yeah, look, you called out we did say in May that we were increasing the dividend per annum from 5%-10%.
That was the correct policy back in May, and we believe it's still the correct policy today.
Okay.
Thanks very much. I'll turn it over.
Thank you.
Thank you. Now we're going to take our next question. Just give us a moment. The next question comes from the line of Ajay Patel from Goldman Sachs. Your line is open. Please ask your question.
Good morning. Firstly, I'd like to thank Gregor for all he's done over the years, and best of luck for the next steps. But just on the numbers and the presentation, I've got three questions, please. Firstly, just more of a just I wanted your comments on this because I know that the risks are going to be relatively limited, but I just want confirmation. Clearly, over the quarter, we've had a number of things impact the sector, Siemens Energy and the 4.X and 5.X turbines, legacy projects that have had problems at Ørsted. I just wanted to have clarity on SSE's exposures to those types of issues, if at all. And then secondly, on the return framework that you outlined, yeah, that hasn't changed since the full-year results, and you wouldn't expect it to change that much over that timeframe.
But I just wanted to understand how that will move around. Well, one, has there been any changes in the way that capital structure is for new investments with the change that we've had in interest rates? But two, how does this framework adjust for when rates move, if at all? And then lastly, just on pipeline, could you just summarize the key projects that could be delivered over the next 12 months, especially in particular what may go into AR6? Thank you very much.
Yeah. Sure. Okay. On sector impacts, so it's obviously unfortunate that some of the other companies in the sector have struggled or had certain issues. I think in respect of Ørsted, the bulk of the issues appear to have been over in the U.S. and in the offshore market in the U.S., and we don't have any exposure there. We've continued to look at the U.S., but we've not made any investments. And obviously, the offshore market there definitely looks a tricky place to invest at the moment. So we're certainly not contemplating anything or doing any work on that currently. In regard to Siemens Energy, and particularly, let's say, Siemens Gamesa, which appears to have been the biggest issue for them, I think we've worked well with them in the past. We'll continue to work with them. We like the portfolio of development assets we bought off them.
We'll certainly use any of the turbines that they've got that they're prepared to sell to us and stand behind at the moment. They appear to have some issues with some of those, and they're still selling in the offshore market, but I think less so with their bigger, newer onshore ones. But there are other players, Vestas, Nordex, GE, for example, that we can use. So I don't see us having any particular problems with them, but we'd obviously hope that Siemens Gamesa make a full recovery, and we can continue to see them in the mix for all the bids that we do, and we can look to deploy their turbines in the years to come. I think on returns framework, Barry may want to comment briefly, and then Martin will perhaps deal with pipeline for AR6.
The only thing I'd say is that as interest rates go up, we've definitely seen internal hurdle rates go up, and that's probably been reflected a bit in things like the Arklow bid and what we looked at in AR5. So although we've got that growth in 11%, we'd certainly have been well above that for some of the bids that we made this year. And we're just trying to reflect what's going on. I don't know.
Yeah. No, no. Look, AJ, look, Alistair, I think that's exactly it. There's been no change to our framework for project returns. It's very much a spread to WACC. Clearly, the WACC is mechanical to a certain extent. So we would look to reflect that as we update the framework. And then I think on the offshore piece, for anything that's funded on off-balance sheet and its equity returns, yeah, as Alistair on said, it's greater than 11%, but in this climate, it is definitely greater than 11%, and it would have certainly been that case for Arklow in the Irish auction. And very simply on AR6, I mean, obviously, the lead possibility for us is Berwick Bank 4.1 GW. Total projects, obviously, that'll be done in stages. That's awaiting consent for the offshore array from the Scottish government.
So depending upon that and timeframes, there is a potential for that to go into AR6, depending how all of that configures. Probably important to say that Berwick Bank, if it can't do AR6, we'd expect it to be in AR7, and it's very difficult for us to see the UK government achieving its offshore targets without Berwick Bank taking a contract at some point. There is also the possibility of submitting Seagreen 1A into AR6 again, dependent upon timeframes.
Okay. Fantastic. Thank you very much.
Thank you.
Thank you.
Now we're going to take our next question. The question comes from the line of Deepa Venkateswaran from Bernstein. Your line is open. Please ask your question.
Thank you. I had three questions. But before that, Gregor, thank you for all your service over the years and wish you all the best in your next phase of life. And I also wanted to thank for the excellent disclosures on the project, the flagship projects, both on returns as well as the operational metrics. Now going on to my questions. So I think on transmission, obviously, you've still got a couple more years under the current price control, but I was wondering if you can give us an update on what we should expect from the Ofgem consultation expected in December, and also any thoughts on the cost of debt indexation, which they're supposed to come up with an informal consultation as well. So that's the first question on transmission.
Second one, Martin, you made a statement that the UK carbon prices you expected not to be well below Europe in the next few years. Could you just explain your logic and rationale for why and when the UK carbon prices will converge? And my last question is a bit more on the capital allocation. Clearly, if you look at the increases in capital allocation in the last two set of updates, they have been leaning more towards networks. So I wanted to understand, is that a reflection of network opportunities being there and then you as a licenseholder having to do these projects, or is it also reflective of a higher risk-reward towards networks versus renewables? Thank you.
Okay. Fine. Gregor, then Martin, and then I'll do capital allocation.
Yep. Thank you, Deepa, and thanks, everyone, for your kind words. Very much appreciated. On transmission and the price control on T3, obviously, Ofgem will come out in December. There's clearly got to be a movement on the cost of equity with the huge amount of spend that's happening in ASTI. We'll be looking, I think, just look at financiability into T3 and T4, and therefore, asset lives, fast money, all those type of things have to be looked at. And clearly, we've had early discussions with Ofgem, and I know the other TOs have as well. And I think we will see, hopefully, positive movement in that front. On the cost of debt indexation, as you know, a very technical point, it's associated with how the inflation comes through on the debt flow-through. I think there are a number of options that Ofgem came up with.
It's not clear which route they would go down, but if you read the language that came out on their document, I think hopefully, the status quo will continue. I think with inflation coming down today, CPI coming in at 4.6%, perhaps it's less of an issue that they're concerned about. And actually, when we've done the numbers, the kind of difference in kind of numbers is relatively small relative to impacting on the stable regulatory environment that we have. So I'm hopeful we won't see any major change there.
Hi, Deepa. Just on carbon, I mean, obviously, the EU price, I think today's around EUR 77. And it's a pretty well-established, mature market, which has very good adjustment mechanisms in it, including the MSR, to adjust when things surprise and the market needs recalibrating. I guess the UK market in comparison is pretty immature. There are no stability mechanisms as yet, and therefore, the market's less responsive through policy in terms of demand changes and the ability to recalibrate back on price. I guess there is the possibility, and we would advocate for this, that supply adjustment mechanisms should be included into the UK price or the UK market. And if that happens, then clearly, you'd expect kind of an increase in price nearer to the EU price.
In the absence of that, I think we've got several years of UK carbon length to work through, and then there'd be a natural rebalancing of price a few years out. But there is the possibility, of course, that policy intervenes before then.
Okay. And just then on the capital allocation point, if we move to that, essentially, we've taken the opportunity in transmission or in networks. We see really strong growth across the piece in terms of renewables, flexible generation, and networks. And we just happened in these last six months to have landed a significant set of opportunities around transmission, particularly over the next decade as part of the ASTI and LOTI processes going forward. I think we'd like to see some acceleration from where we are now of what's happening in renewables, and particularly on the flexible side with CCS and hydrogen. And indeed, there have been rumours and discussions in the newspapers about things coming out over the next few days and certainly over the next few weeks on that front. So I think, again, we'll see opportunities for us.
But what we have to do is look what's in front of us, what makes sense, and where we think we can make sensible returns for shareholders while also delivering for society. That's what we've reported on this morning.
Alistair, could you just confirm what is the newspaper report you're referring to? Sorry, news on what?
Well, just essentially that you've got a Chancellor's Autumn Statement coming up. You've got an international investment conference coming up. I think government remain interested or keen to do something on CCS and hydrogen. When I talk to people in the press, they seem to think that there will be announcements coming.
Okay. Thank you.
Thank you. Now we're going to take our next question. The next question comes from the line of James Brand from Deutsche Bank. Your line is open. Please ask your question.
Hi. Good morning, everyone. And also my congratulations and thanks to Gregor. Well done for going out on a high. I have three questions, hopefully, three relatively short ones. So firstly, all in different areas. Firstly, on the LOTI and ASTI investment of GBP 20 billion in total, I was wondering whether you could say how much of that was in your plan out to 2026/7. Obviously, just trying to have a view on how much would still be to come after that. Secondly, there's some Bloomberg reports last week that the government was looking to significantly raise the administrative strike price when that's announced later this month for offshore up to GBP 70, GBP 75 a megawatt-hour. I was wondering whether you were having positive vibes as well from government and that they might be gearing up for a significant increase there.
And then thirdly, for Martin, you said that your teams are working well to contain any delays in the renewable construction for projects within project contingencies. And also, one of the slides, slide 29, highlighted that more than 90% of the CapEx have been locked in at FID. So I just wanted to clarify, are you saying that all your major projects are basically pretty much in line with budget, or are you seeing any cost overruns? Thank you.
Yeah. Look, I'll let Barry take the first one, and Martin can take them. Just on those cost overruns, I think what my high-level view of it is, we're saying that our guidance in terms of the returns that we're getting hasn't changed. There'll always be lots of things that do change in a bit of a very high level. I don't think our guidance on returns is changing. But do you want to?
Yeah. Just underlining in ASDE out to 2027, it's a little over GBP 4.5 billion of our share out to that period. Okay. And so firstly, on the Bloomberg article on AR6, I mean, so firstly, obviously, it's a speculation. Secondly, this is about administrative strike price, or my understanding is the article's about administrative strike price, not necessarily the size of the pot or indeed the allocation of that pot to different technologies. And as you know, that is almost as important as the ASP in terms of kind of looking to see how that all flows through. So any announcements on that, we'll obviously study in detail. I mean, just generally, I'd reiterate the point, though, that we think AR6 and AR7 are going to be very important in delivering the U.K.'s offshore ambitions.
So we'd be hopeful mechanisms would be set up to enable contracting of, well, 10-12 gigawatts per in each auction is kind of the number we've put out there. And as I say, LCP have got a number out there for 25 gigawatts today. Then in terms of projects, I mean, Seagreen, as we say, is complete. Viking, all the turbines are up, so we are happy with that. And Dogger Bank, clearly, we've made good progress. We've achieved First Power. And as of today, construction work continues. We're pretty happy with it. 95 monopiles are in. 58 transition pieces are in. We've got 4 wind turbines up. So the project is progressing. Obviously, we're in a more tricky kind of winter-weather window now, but we're comfortable that our projects are progressing in line with our plans and our COD expectations. Yeah.
I think for me, we've certainly had conversations with a variety of politicians. I think there's agreement across the political spectrum that the targets that people are talking about for 2030 and for 2035 are important, and people want to deliver them. And therefore, there's a really great opportunity, I think, over the next couple of weeks for the government and the Chancellor to come out with announcements that will hopefully see us really move forward on AR6 and AR7 in a positive way.
Great. Thank you very much.
Thank you. Now we're going to take our next question. The question comes from the line of Dominic Nash from Barclays. Your line is open. Please ask your question.
Good morning, everyone. I think 3 questions from me. First question, a very short one, is why do we have an administrative price for offshore wind at all? I can't really see the point of it in line that you can control the auctions with, as you say, with pot sizes and other sort of mechanisms. So I just wanted to know what your view is on that and why the government perseveres with that structure. Secondly, on your debt profile, I was quite interested that you have an average duration of 6 years. And looking at your debt profile for your renewables, which looks longer than 6 years, and you've got like 10, 15 years of debt, you've probably got a shorter average duration for the regulated portion.
And then when you add in the fact that CapEx is going to explode towards the end of this review as well, you've got to raise significantly new levels of debt at the sort of current sort of marginal sort of rates. Is there a chance of a material tracking error between your actual cost of debt and the cost of debt indexation that Ofgem puts through, which I think has like a, what, 17-year or 10-year sort of moving average number? And what can we do to mitigate that risk? And then finally, my final question, one to you, Gregor. I know everyone's been saying sort of congratulations and well done, and I'd like to add to that. But I'll be interested you've obviously seen an awful lot go through in SSE over these last couple of decades.
I'll be interested in your sort of view as to what you think you could have done differently or would like to have done differently and what you potentially would like to see happen with your perspective of hindsight and the fact that you're soon going to be out the door. So hopefully, you can free to speak your mind. Thank you.
Well, we're in the process of capturing him to be the chair of the transmission business, as he mentioned. So he won't be quite out of the door, and hopefully, he won't be quite so free to speak his mind. But I think Gregor's always spoken his mind. I suspect if he could have just done a little bit better on the chipping over the years as well, he would have taken a few more prizes at the golf as well. But anyway, I'll leave Gregor to answer those. Great. Thank you for that one. On the administrative strike price, I suppose you should ask government why they have one. It obviously didn't perhaps do a great deal for them in AR5.
But what I would say is I suspect they'll say that they believe it protects them from ending up with one particular bidder taking a very, very high price in an auction that isn't terribly competitive. But it's really a question for government and for Claire Coutinho and her department, essentially, as to whether they want to review that just on debt profile.
Yeah. No, hi Dominic. Yeah. On the 6-year average debt, you referred to that's obviously the debt at the corporate level. At the PLC, I think the renewables debt is that's the non-recourse project finance debt. So that's 15 years, but that's at project level, non-recourse. And I think the important thing to flag on that is in Martin's slide, we locked in that funding back in 2020 for those projects. So that's secure there. Yeah, there will be new debt issuance clearly needed as we get to the back end of the plan when the CapEx increases. But we've no concerns in terms of how that gets put through in terms of the network regulatory framework. Obviously, T3 needs to be discussed further with Ofgem, but we don't have any concerns on that piece.
Then finally, the reflections of a particularly fine vintage finance director.
Actually, I think, Dom, it's a good question. If you look at when I started, I think our share price was around GBP 6.75. We've paid over GBP 15 in dividends. We've created huge total shareholder return over that period. So I don't think we should be. I should be disappointed. We should be disappointed or done anything differently. We've done very smart acquisitions. We've not committed significant parts of the balance sheet. I think that discipline has been really important. But Airtricity, clearly, was a really important kind of transaction. You learn through the financial crisis. You learn through other areas. But I think if I was doing anything different, it would probably be we would have maybe tidied up the group a bit earlier, some of the smaller businesses and contracting.
And possibly, I know it'll be controversial, but possibly kind of coming out of domestic retail a bit earlier. But I think it's not a bad record. So I'll take it. And I've passed the baton on to Barry. He's been with the business 15 years. He's been my right-hand man for the last 7. He's more than capable of taking it forward.
Yeah. I think equally, Gregor, Gregor's never been a big one for paying a lot of goodwill for assets. He likes to see an asset that's got a profit stream coming out from it as well. I think that served us pretty well on the acquisition front. Indeed, when we're bidding for things as well, big, big amounts of goodwill are tricky to deal with. So anyway, well done, Gregor. Thank you for the questions, Dominic.
Thank you.
Thank you. Now we're going to take our next question. Just give us a moment. The next question comes from the line of Harry Wyburd from Exane BNP Paribas. Your line is open. Please ask your question.
Hi. Thanks. Good morning, everyone. Just to add my congratulations and all the best to Gregor. I appreciate a lot of the burning ones have been asked. Just two short ones. Firstly, on impairments, clearly, there were no impairments on your renewables assets or any of the platforms you've built up over the years in these results. Would it be fair to assume now, with rates having come off a bit, that we've sort of passed the peak sort of area of peril on impairments? And would you be happy to say that we are now very unlikely to have any impairments of renewable assets in your portfolio?
And then the second one, just to maybe challenge a little bit as to what you mentioned on the US, that you wouldn't look at that at the current stage in the cycle, could it actually be the best point in the cycle to look at potentially buying a platform in the US, given that you'd probably be able to pick it up at a very good valuation, given that there's starting to be some sensitive signs of a pricing improvement? Obviously, you mentioned the New York round 3 auction result, but you've also got the leaks on AR6 pricing. Perhaps it would actually be a good time to build out a platform internationally and perhaps catch the bottom of the market and then have exposure to improving pricing, stabilizing rates, and maybe even supply chain stabilizing.
I'm interested in your thoughts on at what point you might change your mind there and go back into expansion mode. Thanks.
Okay. Thanks. Gregor, do you want to go? Who's doing impairments? Yeah. Barry. Sorry.
Hi, Harry. So look, as you'd expect, for the half year, we did our usual review for impairments of indicators of impairments that we do every six months across our renewables fleet and our thermal fleet. And yeah, look, there was no indicators of impairments in the renewables projects. You look at the big construction projects we have undergo. Martin spoke earlier on about how things have improved in the macro on those projects since we took FID on the big offshore ones back in 2020 and Viking back then as well. And then you look at our development seabed. Obviously, we look at that. We spend low levels of DevEx on the early-stage development work on those projects. But the key piece for those projects is they're not unencumbered by big lease fees or out-of-the-money revenue contracts or big construction reservation contracts.
As things stand today and as part of our normal review, there is no indicator of impairment.
Okay. Thanks for that. Interesting question on acquisitions. Obviously, when things look too cheap, then it's obviously an interesting time to think about whether you want to buy something. And so if that were true, then we probably would be interested. If you've got an asset class that you can manage, you know how to deal with it, and it's particularly cheap, then great time to buy. However, we've got an enormous amount of CapEx. We've got a lot of assets that we know how we want to deal with. And therefore, the focus on delivering what we've got and driving forward the opportunities that we've got is pretty clear. U.S. generally, I think the offshore market's clearly got issues over there. A number of very big, very capable companies have suffered a little bit recently.
We'd need to be super, super clear that we thought we could make returns in the offshore market. Pretty much at most prices at the moment, that looks pretty challenged right now. I think our shareholder and investor base are pretty clear on that as well. Whether onshore platforms are things that can do well, the biggest player in that market's obviously suffered a fairly big hit to its share price over the well, certainly the course of this year and over the last year or so. Yeah, maybe prices are normalizing, but we've got an awful lot else to focus on. I think we'll stay pretty focused on our GBP 20.5 billion, whatever else comes, AR6, CCS, hydrogen, all the other announcements.
It'd be interesting to see what other opportunities we have between now and Christmas and all over the next few months as this government, the Irish government, continue to move forward.
Okay. That's clear. Thank you.
Thank you. Now we're going to take our next question. Just give us a moment. The next question comes from Martin Young from Investec. Your line is open. Please ask your question.
Yep. Good morning to everybody. I think we've spoken quite a lot about the long-term game of investing in networks and renewables. So very interesting to see that Gregor needs to practice a bit on the short game. But I wish you all the very best with that, Gregor. Just a couple of questions from me that I picked up from the results announcements this morning. Looking at the capital allocation that you set out today, GBP 2.5 billion in what you might describe as thermal and other, if I compare that back to the full year results back in May, you were talking about 10% of GBP 18 billion, so GBP 1.8 billion. What is the GBP 0.7 billion delta that you are thinking about today going into that particular bucket?
And then the second question is around your updated hedge positions that you've disclosed this morning and the split now between power hedges and gas hedges. Is the best way to think about those gas hedges, to take that hedge gas price, assume an efficiency level for the marginal plant on the system, and then just take a view on where you think carbon might be to land at a potential proxy for a power price that you have sort of locked in for the renewables book? Thanks.
Okay. No, thanks for that. Back to Barry again.
Yeah. Yeah. For the capital allocation one, I think, Martin, when you're talking about CapEx of GBP 18 billion and GBP 20.5 billion across 5 years, it's across many different businesses, many different projects, and different phasing. So ultimately, that's really down to roundings. As we look at both of them, you're in and around GBP 2 billion or a little over GBP 2 billion across that thermal and other, which obviously includes Enterprise and things like corporate IT, etc. So there's no material movements in that number. It's really in the roundings.
Yeah. Yeah. But on a slightly wider scale, we've not, over the last six months, seen particular advancements in CCS, hydrogen, other thermal that lead us to believe that there'll be substantially more CapEx, certainly over the five-year period. And as I've almost said earlier in the presentation, we would hope to see a little bit more news coming out. I think there's the opportunity for government to move that forward. And then hedging, I'll leave to my expert.
Yeah. Well, so Hobart's in first. His simple answer is yes. But just to give a bit more color on that, we referred earlier to the liquidity issues in the UK carbon markets as a mature and form. So that means it's very difficult to trade a carbon price out there. Historically, we ideally would love to trade pure power against our renewables. Historically, because we've been unable to trade that because of liquidity issues in there, we've traded gas and carbon as a proxy. But the carbon obviously has been slightly disrupted by the change in price and the issues we discussed earlier. So now gas price is the best anchoring exactly right in terms of the calculation as a proxy back, depending how you see spark prices and carbon prices.
Thank you.
Okay. Thank you.
Thank you. Now we're going to take our next question. And the next question comes from Ahmed Farman from Jefferies. Your line is open. Please ask your question.
Yes, hi. And thank you from my side to Gregor as well for his insights and time. And I have a few questions. I'm going to start actually with sort of Dogger Bank A. And congratulations on First Power there. Can I ask though, I mean, if there's any concern with the speed of installations of the actual offshore wind turbines? The first one was installed on 29th of August. I think in one of the earlier comments, you said four have been installed now. And I think that's out of 95, I believe, total. So any comments there would be helpful. Then moving on to sort of the medium-term guidance. So you have talked about an increased RAV target, but it's the EPS range is the same. How should we interpret it? Is it caution timing, or are there some other offsetting effects?
I would also be interested in sort of understanding you made quite a bit of points about the visibility that you have on the 27 EPS range. Are you also going to sort of give us some color on how much of this EPS is sort of contracted? And by contracted, I mean regulated, CFDs, hedge prices, sort of things that sort of we can sort of broad definition of contracted earnings. Those are my questions. Thank you.
Okay. Well, I might give a brief overview on most of those. Look, I think we've made a number of comments about Dogger Bank already. Martin's given numbers for foundation installations, transition pieces, talked about how many turbines are there. Look, we are comfortable with progress at the moment. We are working hard as are GE and the other major contractors there to get that done. But don't underestimate the fact that you're heading into a difficult weather window right now. You're installing, first of a type, a leading class. It is the biggest wind turbine in the world. So this is reasonably bleeding-edge technology. The water's not that deep. Fortunately, there's a long way offshore. So while we've made a lot of progress, there is a long way to go on building out that project. And we remain comfortable in our returns.
Those are the high-level parameters we can give you at the moment. Those are the few things. I don't know, Martin, in case you want to add anything.
Just to also say, I mean, obviously, these projects are complicated, but we are still expecting COD in the second half of next year for Dogger Bank A.
That's there. I think medium-term guidance, visibility on EPS, all we want to do is reassure people that a five-year plan that we put out there, I think it's some of the longest guidance you'll find out there in the future in the 250-350 on the London market, is just solid. We're trying to give a consistent update to where we are on that. We've got a clear range. We've moved a little bit closer to that. We've also said the increased CapEx gives us more confidence or greater comfort that we'll be able to hit the numbers into that range as well. So at the end of the day, short of publishing Gregor and Barry's five-year models for all these things with all the different numbers in and where they are, we're just trying to give you as much comfort as we can.
What a great business we have, what a huge array of opportunities we have, how disciplined we are about deploying our capital and our absolute drive and focus on making sure that we're delivering for shareholders and society.
I think just I think Barry's going to answer the final question. But just on that, obviously, with the transmission spend, it just gives us more comfort that we're going to be within that range. And I think that's possible. We're not going to give kind of line-by-line kind of trail how we get there. But we should be more confident of being within that range.
Yeah. And I think on the contracted question, I think we have in the slide we've laid out in the slides the percentage of EBITDA that's coming from contracted or contracted revenue or regulated revenue across the piece was over 60%. So I think there's quite a bit in the pack already.
Okay. Thank you.
Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star one one on your telephone keypad. Now we're going to take our next question. And the next question comes from Charles Swabey from HSBC. Your line is open. Please ask your question.
Hi. Good morning, everyone. And thank you very much for taking my questions. And I'd obviously like to add my congratulations to Gregor. There's two questions for me. The first one, within your guidance for transmission RAV growth for both the next five years and out to 2032, are you anticipating a speeding up of permitting and consenting timelines for these projects, or are these based on historical norms? And then for my second question, could you comment on press reports about slow progress regarding agreeing a cap and floor mechanism for the Coire Glas pumped hydro project? Thank you.
Okay. Well, I'll give you a couple of thoughts. I think in T, we're anticipating, yes, where we've been to historically. So we've not particularly suffered a lot of public inquiries. I suppose the last big one was on Beauly-Denny. More recently, we did end up in a public inquiry unexpectedly on the Argyll line. I think it is on the basis that we go through normal processes, which aren't particularly quick, and that we don't suffer an increased number of referrals to public inquiry and things like that, which generally delay things by up to two years. So that's the basis on which those things are there. And it is possible that that expenditure, in the words of contractors, could move to the right if we see significant additional consenting and permitting requirements as we run through normal statutory processes. And we are absolutely committed to engagement.
We've certainly got a very, very big department working on engagement with locals to make sure and understand not only the benefits to the wider Scottish economy, but the fact that we're willing to listen, change routes, and do all we can to mitigate any of the impacts of installing that infrastructure. And it's why we specifically called out the need to work hard with government and regulators on mechanisms to make sure that we're rewarding not only those people who benefit from this new renewable energy, but also the people who are hosting the infrastructure that make that possible for the country more widely. Yeah. I think I'd be disappointed on progress on the Coire Glas cap and floor, given that discussion has been going on for some while. But Martin may want to update on his more detailed views recently.
Yeah. So I mean, the government has always, we believe, been supportive of long-duration storage. I think there's a strong recognition of the requirement for flexibility on the system to handle the intermittency that comes from wind and also the regional value it gives. I don't think any of that's particularly changed. We understand the government is continuing to work on that. And of course, the sooner the better, I guess, in terms of because we are looking to get our Coire Glas asset away, but understand there is complexity on it. And we'll wait and see what the government comes up with.
Yeah. I think we're running out of time to hit a 2030 window for delivery of that asset. And that asset, I think, will be very, very important in helping balance the system and providing a high-quality, low-carbon system in 2030 that we previously stated would have taken GBP20-GBP30 billion of costs off of consumers in 2022 if you'd looked at prices. That's what people are aiming at, I think. And if that's what people want, then assets of that nature need to get built.
Perfect. Thank you very much.
Thank you. There are no further questions at this moment. I would now like to hand the conference over to our speakers for any closing remarks.
Okay. That's great. Thank you all very much for tuning in and listening. Thank you as well for all your questions. Thank you very much as well for your kind comments. We've had a fantastic ride with Gregor. It's been great. I suppose we'll all have to try and see if we can get a drink out of him down the pub at lunchtime. All right. Have a great day.