Utility Week

UTILITY WEEK | 5TH - 11TH OCTOBER 2018 | 15 This week Grid cleared to spend £111m on gas pipeline Regulator's change of heart means National Grid can replace transmission pipeline under Humber Ofgem has given National Grid permission to recover £111.3 mil- lion through network charges to replace a major gas pipeline under the Humber estuary. The regulator had previously turned down the company's request for a larger sum of £139.9 million on the grounds it had failed to demonstrate the project would be in the best interests of consumers. The Feeder 9 transmission pipeline carries gas from the Easington terminal on the east coast of England towards the south west of the country. National Grid's surveys in 2009 found that sections of the buried pipeline had been exposed by erosion of the river bed. It carried out temporary mitigating works in 2010 and in May this year began building a new tunnel for a replacement pipeline under the Humber. National Grid applied to Ofgem for a £139.9 million increase to its RIIO-T1 spending allowance to fund the project, to which it had already committed £93 million. In its submission to the regulator, the firm said there was potential for an explosion if the pipeline was struck by a vessel or its anchor. It said the loss of Feeder 9 would drive up gas and power prices, and could jeopard- ise security of supply. The regulator initially refused the request, saying National Grid had failed to show that the risks justified an immediate replacement. Furthermore, it said a new pipeline should cost just £104.6 million. Ofgem has changed its mind in the light of new infor- mation on the cost impacts of the current pipeline failing, and increased the allowed costs to £111.3 million. TG ELECTRICITY Tidal Lagoon strikes deal with creditors Tidal Lagoon Power, the com- pany behind the Swansea Bay tidal lagoon project, has struck a deal with creditors to help pay off its debts. A "tidal lagoon taskforce" has convened in Wales to enable local and national authorities, as well as community and business leaders, to consider all options for financing and delivering Swansea Bay tidal lagoon inde- pendent of Westminster. In June it was revealed the government would not back plans for the Welsh city's pioneering tidal lagoon power plant, putting the future of the project into serious doubt. The company entered into a Company Voluntary Agreement (CVA) which allows it to repay some of the debt over time. The CVA approval process has "con- cluded successfully" and the project is still set to go ahead. ELECTRICITY Wylfa 'will cost less than Hinkley' The new nuclear plant being planned in Anglesey will be "considerably cheaper" than Hinkley if it is developed, the project's director has said. Leon Flexman, corporate affairs director at Hitachi-backed Horizon Nuclear Power, told a fringe session at the Labour party conference that cost reduc- tions in the Wylfa project are having a knock-on impact on the strike price, the guaranteed floor for the sum it will be paid for generating electricity. He said that nuclear, like renewable energy, would see a reduction in construction costs as more plants are built. In addition, Flexman said, Horizon is negotiating with the government to reduce the cost of financing the project. ELECTRICITY Ditch nuclear and costs would rise Abandoning nuclear power could drive up UK electricity generation costs by 15 per cent while more than tripling the amount of carbon produced per kWh by the power sector, according to a report from the New Nuclear Watch Institute (NNWI). The report examines the con- sequences if the UK government heeds calls for atomic power to be phased out with natural gas providing a bridge to a future in which generation depends on renewable energy. It says an enforced phase-out will increase the generation cost of the UK power system from £82/MWh to 95/MWh. This 15 per cent increase would drive up system costs by £3.2 billion a year, estimates the study. Feeder 9 transports gas from Easington terminal Finance & Investment Stock watch 24 22 20 18 16 14 12 EDF SHARE PRICE, SIX MONTH EU ETS PRICES, SIX MONTH Jefferies has raised its target for EDF shares from €14 to €17.50, partly because of the recent rise in the price of EU ETS allowances. Back in July they were trading at about €15 per tonne. Since then, the price has risen to €22, briefly hitting a near ten-year high of €26 in September. Analysts at the investment firm said there has been a knock-on effect on French power prices, which have increased by nearly a quarter over the same period. 16 15 14 13 12 11 May Jul Sept May Jul Sept euros euros

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