Utility Week

Uberflip 24 01 14

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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Finance & Investment This week Developers could win a subsidy auction and then Electricity Offshore links to be abandon projects, shutting the door on rivals more City-friendly Renewables auctions unproven, says RWE Renewable subsidy auctions "have not been shown to work" and could shut out good projects, senior executives at RWE warned as they outlined their growth ambitions last week. The government is consulting on plans to make developers of established renewable technologies, such as onshore wind and Wind projects could be stopped in their tracks solar, compete for contracts from day one of its support regime under Electricity Market Reform (EMR). The managing director of RWE's UK renewables arm said she was concerned the proposed system could allow developers to successfully bid but not follow through, meanwhile denying other projects a chance. "We fully support the principle that the most economic projects get built," said Julia Lynch Williams. "[But] we have not seen the model of auctions working very well… You can get a project that bids, even if it is not confident it is going to go through. That is a lost opportunity [for others]." Lynch Williams was speaking to journalists at a breakfast briefing in London, in which she and chief operating officer Paul Coffey set out a new approach to expanding RWE's renewables business. RWE Npower Renewables, which is to be rebranded RWE Innogy UK at the end of January, is moving away from wholly owning and operating its own renewables projects, they explained. Instead, it now aims to offer consented projects to the market and recycle the capital. •  See utilityweek.co.uk for the full version of this article Stock watch Falling energy consumption, a weak economy and a political squeeze on energy retail prices could precipitate dividend cuts at Centrica and SSE, according to analysts. Shares in the firms slid after downgrades by Barclays Capital last week. Analysts Peter Bisztyga and Monica Girardi warned in a note that the squeeze could reduce current 5 per cent profit margins at both firms closer to those of their European counterparts at 2-4 per cent. 20 | 24th - 30th January 2014 | UTILITY WEEK Ofgem is seeking to curb the cost to consumers of offshore generation by opening the offshore transmission market to a wider pool of investors. With up to 15GW of additional offshore wind anticipated, the regulator said it was looking to reduce the cost of offshore transmission development by better co-ordinating offshore assets through wider network benefit investment (WNBI). An example of WNBI might be linking existing infrastructure to connect new windfarms to the grid. According to Ofgem there is "no clear route" for investment in co-ordinating links by nondevelopers – entities outside the existing offshore players. Energy DNOs fight to retain higher cost of equity Energy network companies are resisting regulatory changes that Ofgem says would shave £2 off average annual household bills. Ofgem's proposal to alter the way it sets allowed shareholder returns is "inappropriate" and could harm investment in the sector, they said. Ofgem is seeking to cut the cost of equity allowance for distribution network operators (DNOs) by 0.8 percentage Centrica share price, 13 - 20 January points, in line with the latest thinking from the Competition Commission. That could cost the industry up to £500,000 over the eight-year RIIO-ED1 price control period. Consumer Futures and British Gas have backed the move, agreeing with the Competition Commission's approach of giving more weight to recent data, which suggests investors are willing to accept lower returns. However, in their consultation responses, DNOs said it could undermine investor confidence in the stability of the regulatory regime and push up finance costs in the long run. Nuclear Toshiba takes control of Moorside Toshiba has agreed to buy a majority stake in NuGen's Moorside nuclear project. The Japanese company is set to take a 60 per cent stake in the project, after having agreed to buy all of Iberdrola's 50 per cent stake in NuGen and an additional 10 per cent stake from GDF Suez. GDF Suez remains involved in the new nuclear project and retains a 40 per cent stake. The deals are worth a collective £102 million and Toshiba, which owns reactor designer Westinghouse, said the first units at the 3.4GW nuclear plant would be operational by 2024. SSE share price, 13 - 20 January 332 1360 1350 328 1340 324 1330 320 1320 316 1310 13 Jan 16 Jan 20 Jan 13 Jan 16 Jan 20 Jan

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