Utility Week

UTILITY WEEK | 5TH - 11TH OCTOBER 2018 | 17 Finance & Investment and Wylfa, will materialise. If any do, the financial terms will be radically different. As such, offshore wind power seems set to boom over the next decade. Hydro power has been operational for many decades and is key in Scotland. However, the best sites have long been exploited, so that hydropower's growth since 1970 has been muted at best. Alternative generation Marine-based generation is struggling. The two most high-profile projects – the various Severn Barrage proposals and Swansea Bay – are "parked". The former is very expensive and complex while the latter is predicated on vast, long-term financial support. Biomass remains dominated by heavy subsidies for the Drax conversion strategy, while geothermal power – ideal for Iceland – cuts little mustard in the UK. And fuel cells, despite some promise, are still very much work in progress. However, solar power is now taking off with several quoted solar funds, such as NextEnergy Solar, reporting solid operat- ing performances from solar farms, oen located in remote areas of south and central England. Against this background, some individual companies remain well placed. The share price of Spain's Iberdrola has outperformed that of its big six peers in recent years. And various renewable energy funds, which enable an element of risk-sharing, have also prospered. On the basis that offshore wind gen- eration will boom; three quoted companies stand to gain. First, Germany's Siemens, which has wide-ranging assets outside the electricity sector, leads the way in construct- ing massive offshore wind turbines. Second, Denmark's well-known wind tur- bine manufacturer Vestas is now recovering aer a torrid period when its very existence was in doubt. Its latest share price of around DKK440 is about 20 per cent off its aggressive rating a decade ago. But, by November 2012, its shares had plunged to just DKK 26. Third, Orsted looks set to play a major role in generating offshore wind power. Generation sector losers, notably ther- mal plant operators, have already seen their share prices plunge in recent years; they include RWE and Eon, while shares in the nuclear-dominated EDF have performed poorly. More change is undoubtedly afoot – oth- ers may seek to emulate RWE and Eon, which are currently restructuring with a vengeance. Nigel Hawkins, director, Nigel Hawkins Associates This chart shows quarterly totals of electricity generation by technology type for the GB national electricity transmission system, as well as net imports. Coal Oil Gas Nuclear Hydro (natural flow) Wind and solar Bioenergy Pumped storage Other fuels Net imports Other fuels 3.1% Other fuels 2.9% Gas 42.3% Gas 40.4% Renewables 29.3% Coal 9.0% Coal 6.7% Nuclear 21.1% Nuclear 20.8% Other renewables Wind and solar Hydro Nuclear Steam CCGT THE UK ENERGY MIX OVER THE YEARS ELECTRICITY GENERATION MIX BY QUARTER AND FUEL SOURCE Source: Dukes SHARES OF ELECTRICITY GENERATION, BY FUEL Source: Dukes ELECTRICITY CAPACITY, 2000-17 Source: Dukes 100 90 80 70 60 50 40 30 20 10 0 GW 2000 2002 2004 2006 2008 2010 2012 2014 2017 Renewables 24.5% 2016 2017 125 100 75 50 20 0 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017 Q1 2018 TWh/quarter

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