Utility Week

UTILITY WEEK | 21ST - 27TH JUNE 2019 | 15 This week Treasury to review decarbonisation costs Study will consider best way to achieve net zero for households, businesses and public finances The Treasury will lead a review into the costs of decarbonisa- tion, Greg Clark, the business and energy secretary, has told parliament. The announcement followed a pledge to set a legally binding target of reducing greenhouse gas emissions to net zero by 2050. An amendment to the 2008 Climate Change Act has since been tabled by the government. "The Committee [on Climate Change] has concluded that a net-zero 2050 target is feasible, deliverable and can be met within the exact same cost envelope of one to two per cent of GDP in 2050 as the 80 per cent target when that was set," Clark told the House of Commons. "Such has been the power of innovation in reducing costs. It is, however, absolutely right that we should look carefully at how such costs are distributed in the longer term as Professor Dieter Helm recommended in his report to the government. "So the government is also today (12 June) accept- ing the recommendation of the Committee on Climate Change for the Treasury to lead a review into the costs of decarbonisation and this will consider how to achieve the transition to net zero in a way that works for house- holds, businesses and public finances." Clark said the government will not use carbon credits from other countries to achieve its goal. The net-zero target will be reviewed within five years to ensure other countries are taking "similarly ambitious action" and that UK businesses do not face "unfair competition". TG ELECTRICITY Government 'foolish' not to exploit wind The Confederation of British Industry (CBI) has branded the government "foolish" for not allowing onshore windfarms to be exploited. During the opening session of the Business, Energy and Industrial Strategy committee's inquiry into financing green infrastructure, it was announced that onshore wind schemes would be able to submit "very low" bids if they were allowed to participate in the contracts for difference (CfD) process. Tom Thackray, director of infrastructure and energy at the CBI, pointed to the "huge" generation and supply chain benefits in allowing onshore back into the CfD process, he said: "It is foolish that we are not exploiting that." He also told the committee that the upcoming energy white paper should outline a "way forward" on the financing of onshore wind and solar projects when it is published – which he said should be before parlia- ment's summer recess. ENERGY Renewables a better bet than incumbents Renewable generators and regulated networks are safer bets for investors than incumbents in the retail sector, according to an analysis by Macquarie Research. Despite regulators' "squeeze" on profits, the company still expects network operators – National Grid and the three listed water companies – to generate "attractive" long-run returns. It said investors have over- estimated the risks of rena- tionalisation under a Labour government, with the market applying an excessive premium. Meanwhile, the renewables sector is set to enter a "golden decade" as progress towards decarbonisation gathers pace. ELECTRICITY Engie buys EV network operator Engie has bought the opera- tor of the GeniePoint electric vehicle (EV) charging network, ChargePoint Services (CPS), for an undisclosed sum. The deal will create a com- bined rapid charging network of more than 400 stations, with the figure expected to rise to more than 500 by the end of 2019. Engie's chief executive for the UK and Ireland, Nicola Lovett said: "The provision of green mobility solutions is a key part of Engie's wider strategy to help tackle air quality in cities and be a leader in the transition to a zero-carbon economy. "Acquiring CPS is an impor- tant step in scaling up our ambi- tions in the EV market." Innovation has cut the cost of decarbonisation Finance & Investment Stock watch 400 300 200 100 0 RWE SHARE PRICE, FIVE YEAR 2016 2017 2018 2019 CENTRICA SHARE PRICE, FIVE YEAR Plans by RWE to become a "renewables supermajor" make it a better bet for stock market investors than incumbent retailers such as Centrica, according to analysts at Macquarie Research (see above). The company's share price has risen by more than a quarter since it agreed to buy Eon's renewables portfolio as part of a broader asset swap in March 2018. Meanwhile, Centrica shares have lost more than a third of their value over the same period. 40 30 20 10 0 2016 2017 2018 2019 euros euros

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