SCOTTISH Hydroelectric owner SSE is raising around £1 billion to invest in favoured renewable energy assets such as windfarms by selling stakes in big facilities that generate power from waste.

The Perth-based energy giant has agreed to sell its 50 per cent stakes in the plants in Yorkshire to an infrastructure Investment fund for £995 million cash.

The company said it will use the proceeds to support its plans to invest £7.5bn in low-carbon energy infrastructure over the next five years and to reduce its debts.

READ MORE: SSE reiterates plans for big payouts to investors as it eyes renewables bonanza

SSE recently affirmed plans to make big payouts to investors despite the challenges posed by the coronavirus crisis.

In July SSE said it expected the fallout from coronavirus to cost it up to £250 million in the current year before mitigation, reflecting a drop in demand for power and a rise in bad debts.

SSE and other networks operators are trying to persuade the regulator to scrap proposals to cut the returns they can make on investment in assets such as power lines.

Against that backdrop the company appears to have decided that it does not make sense to leave capital tied up in the Ferrybridge and Skelton Grange waste-to-power plants.

“While these multifuel assets have been successful ventures for SSE, they are non-core investments and we are pleased to have agreed a sale that delivers significant value for shareholders while sharpening our strategic focus on our core low-carbon businesses,” said finance director Gregor Alexander.

The sale reflects the evolution in the strategy of SSE in recent years, under which the company has chosen to focus on renewable energy generation and related networks.

READ MORE: Profits plunge at SSE amid customer exodus

The company has sold off its retail supply business and closed conventional power plants.

It linked up with a US waste to power specialist, Wheelabrator Technologies, to develop two multifuel facilities at Ferrybridge in West Yorkshire on the site of a giant coal-fired power station. This closed in 2016 after 50 years.

SSE said yesterday that these are capable of processing 725,000 tonnes and 675,000 tonnes of waste every year respectively. The plants process municipal, commercial and industrial waste and waste wood.

The deal also covers SSE’s stake in a project to develop a waste to fuel plant at Skelton Grange in West Yorkshire, which it expects will be able to process 400,000 tonnes annually. Wheelabrator reckons this could generate enough to power the equivalent of around 89,000 homes.

It is understood that SSE thinks power to waste plants have an important role to play in sustainable waste management. However, it wants to focus investment on renewable energy assets over which it has more operational control.

The company has said it aims to raise at least £2bn by autumn 2021 through the sale of non-core assets. These include its North Sea exploration and production business.

READ MORE: Energy giant slashes valuation of North Sea gas assets as coronavirus crisis weighs on profits

SSE retains a 50% stake in the Slough multifuel project.

The group has agreed to sell its 50 per cent stakes in the two ventures that own the West Yorkshire multifuel assets to European Diversified Infrastructure Fund III. This is managed by First Sentier Investors, which has an office in Edinburgh.

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First Sentier is the new name for the former Colonial First State Investments business that was acquired by Mitsubishi Financial Group from Commonwealth Bank of Australia last year.

Colonial First State Investments bought Edinburgh-based Stewart Ivory in 2000.

SSE has approved big offshore windfarm projects in the UK in recent months.

In June the company gave the green light to a plan to build the giant Viking windfarm on Shetland. This will involve £580m investment by the firm.

Earlier that 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 and Norway’s Equinor are developing plans to build the massive Dogger Bank windfarm off Yorkshire. SSE reckons this will be the world’s biggest.