SSE has warned it could suffer a hit to profits of up to £250m profits this year as a result of the coronavirus, which is dampening demand for power and causing a spike in bad debts.

The Scottish Hydroelectric owner has also slashed the valuation of its North Sea gas production business by £291m following the plunge in commodity prices triggered by the virus.

READ MORE: Fresh warning on scale of challenge facing North Sea amid coronavirus crisis

However, the Perth-based giant reckons it is well placed to cope with challenging conditions after quitting the household supply business in Britain to focus on the generation of renewable energy and the operation of power networks.

The company signalled confidence in the prospects for the UK market by giving the green light to a plan to build the giant Viking windfarm on Shetland.

This will involve £580m investment by the firm.

Some locals have opposed the plan to build the 103-turbine windfarm on evironmental grounds.

READ MORE: 'We don't want your money' Shetland protests as SSE presses ahead with UK's biggest windfarm

Earlier this month SSE approved plans to build the Seagreen windfarm off the Angus coast after Total bought in to the project. Seagreen will involve around £3bn total investment.

SSE faced flak after it announced that the turbines for the windfarm would be manufactured by a Danish firm on the Isle of Wight.

However, chief executive Alistair Phillips-Davies said yesterday: “There’s nobody more committed to the UK and Scottish supply chain than SSE.”

Noting that SSE is one of the biggest offshore operators he said the firm had made sure that companies in Scotland shared in its success.

He added: “Seagreen was a challenging project to get away in these times but we’ve done that. We think there’s about a billion pound’s worth of economic value added to Scotland and we’re still working … to get more work into Scotland.”

SSE will work with the Westminster and Holyrood governments to improve the resilience of the supply chain to help create more opportunities for UK firms to benefit from projects.

Mr Philips-Davies noted that contractors based on Shetland could start work on Viking soon, adding: “We’ll look to put all the work we can into both Scotland and the UK economy.”

The project is dependent on SSE winning approval from the regulator for a plan to build a £600m subsea connector to link the windfarm to the Scottish mainland.

Mr Philips-Davies believes SSE can help kick start a green recovery from the downturn caused by the coronavirus by developing generating facilities and related infrastructure while remaining an attractive investment proposition.

READ MORE: Should Government increase subsidies for renewables amid plunge in energy sector investment?

It expects to invest around £7.5bn over the next five years, focused on core decarbonisation projects.

The company said it had put in place a comprehensive plan to sustain dividend payments while promoting the long-term success of the firm for the benefits of all its stakeholders. This will involve selling non core assets.

SSE declared a final dividend of 56p per share taking the full year total to 80p per share, which it said was in line with its five-year plan.

Chairman Richard Gillingwater said SSE’s dividend payments provide vital income for people's pensions and savings.

It said the net negative impact of the effects of the coronavirus on operating profit in 2020/21 are expected to be significant in the context of one financial year. They could be in the range of £150m to £250m before mitigation.

Reduced demand for power will impact on SSE’s distribution business and its remaining supply businesses. The division that sells energy to businesses is expected to suffer increased bad debts.

READ MORE: Scottish renewable energy assets in favour with investors as coronavirus hits power prices

SSE recorded £33m increased bad debts as a result of the coronavirus in the year to March 31.

Mr Philips-Davies said SSE is still in talks to sell its North Sea gas business, which has stakes in fields such as Laggan off Shetland.

It expects to offload the business eventually. However, the recent slump in gas prices has complicated the process.

SSE recorded an exceptional loss of £227m on the £500m sale of its household supply business to Ovo, which was agreed in September. The company retains the Airtricity operation, which supplies power to households on the island of Ireland.

Around 2,700 SSE staff in Scotland transferred to Ovo following the deal.

SSE made £588m profit from continuing operations before tax in the year to March 31 against £1.3bn last time.

The renewable energy generation arm grew underlying operating profits to £567m from £456m, reflecting improved weather conditions and increased capacity. It started producing power from the giant Beatrice windfarm off Caithness last year.

Profits in the networks business fell to £777m from £830m

Shares in SSE closed up 9%, 116p, at 1385p.