Utility Week

14 | 21ST - 27TH SEPTEMBER 2018 | UTILITY WEEK This week Hot weather and gas prices hit SSE profits Supplier warns price cap will also contribute to lower-than-expected profits in 2018/19 SSE has said warm weather and persistently high gas prices have reduced its adjusted operating profit by £190 million in the first five months of the financial year. The company's trading update has also suggested that the incoming energy price cap for default tariffs will result in a "significantly lower" adjusted operating profit for SSE Energy Services in 2018/19 than was expected at the start of the year. However, SSE expects adjusted operating profit at its retail businesses for the first six months to be "around break-even". Aer the company completed its financial assessment to 31 August, relatively dry, still and warm weather con- tinued, as have persistently high gas prices. As a result, energy prices have been higher than expected, output from renewable resources has dropped, less energy has been used and energy portfolio management has been difficult, the company said. SSE's wider adjusted operating profit for the first five months of the financial year has therefore been £190 million less than the company expected. Just under half of this is the result of higher-than-expected gas prices and other commodity price changes; the weather is responsible for most of the remainder. The result is that the company expects its adjusted operating profit for the six months to 30 September 2018 to be about half that in the same period in 2017. Alistair Phillips-Davies, chief executive of SSE, described the company's recent financial performance as "regrettable". AJ WATER Yorkshire awards £57m plant contract Engineering and construction company J Murphy and Sons has been awarded a £57 million contract by Yorkshire Water for a new energy and recycling facility in Huddersfield. The plant will include new anaerobic digesters, a new sludge reception plant, sludge thickening plant and storage, CHP and dual fuel boilers, sludge dewatering and lime treatment, cake storage and a new liquor treatment plant. It is seen as a key strategic investment for Yorkshire Water and part of its ongoing blueprint to supply safe drinking water and handle wastewater for its five million customers. Work is expected to be com- plete in May 2021. ENERGY Imperial to plan a low-carbon future Imperial College London has announced a £7 million project that will be part of a plan to build a low-carbon future in the UK. The Integrated Development of Low-Carbon Energy Systems project is due to begin in Novem- ber and will last for five years. Research will focus on understanding the "increasingly complex interactions between electricity, gas, heat and trans- port systems, resulting in a suite of soware tools that can pro- vide a range of possible futures for the UK's energy system". The project, which will also receive £5 million of industrial support, is being co-ordinated by Energy Futures Lab, a cross- discipline institute founded in 2005 and based at the college. Alongside the research will be policy advice on how to make each option a reality and insights into the technologies that will be needed to support it. ENERGY Flexitricity secures £500k from BEIS Edinburgh-based supplier Flexitricity has announced it has secured close to £500,000 to help smaller commercial energy users benefit from demand-side response (DSR). The funding, from the Department for Business, Energy and Industrial Strategy (BEIS), has been awarded to imple- ment and test the next stage of the Quickturn project, a DSR initiative that will use flexible energy-consuming assets such as cold storage, air conditioning and heat pumps to help National Grid balance fluctuating demand on the UK energy system. Flexitricity is now working on choosing a range of sites to implement and test the new solution as part of the second phase of the project. Phillips-Davies said performance was 'regrettable' Stock watch SSE SHARE PRICE, FIVE DAY 23 Aug 31 Aug 7 Sep 14 Sep SSE SHARE PRICE, ONE MONTH SSE shares lost about 9 per cent of their value in the first few hours of trading last Wednesday – dropping from 1,250p to 1,134p – aer the company issued a profit warning ahead of its first half results for 2018. The company said it expects earnings to be down by a half on the same period last year due to high gas prices and low renewable output over the summer. 1160 1140 1120 1100 1080 1060 1300 1250 1200 1150 1100 1050 13 Sep 14 Sep 18 Sep 17 Sep Finance & Investment

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