Utility Week

Utility Week 28th February 2014

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

Issue link: https://fhpublishing.uberflip.com/i/266932

Contents of this Issue


Page 18 of 31

UTILITY WEEK | 28Th FEbrUarY - 6Th March 2014 | 19 Finance & Investment This week UK's appeal wanes for green investors Government's lack of clarity on long-term energy strategy makes UK less attractive The UK has fallen to fih place, behind Japan, in EY's ranking of attractiveness to renewable energy investors. The quarterly Renewable Energy Country Attractive- ness Index (RECAI) shows the UK slipped from fourth place because of "prolonged policy uncertainty" and the news that a series of offshore wind projects have been cancelled. In Japan, a "rapid solar market growth" and a "bur- geoning" offshore sector have made it more attractive. The "mixed messages" being displayed by the UK government were potentially putting at risk the £330 bil- lion of investment that the Institutional Investors Group on Climate Change said was needed. The report comes aer it was revealed the Dogger Bank offshore windfarm zone was being scaled back, and that phase two of the London Array offshore wind- farm would not go ahead. Further cancellations "might be expected", according to the report, because more than 40GW of offshore capacity has been allocated – exceeding the government's 10GW 2020 target. Ben Warren, EY's environmental finance leader, said: "The UK's fading appeal is the direct result of the lack of clarity on the government's long-term energy strategy at a time when investors are looking for commitment." However, there are said to be "signs of buoyancy" in the sector, with more than 18GW of applications for the final investment decision enabling programme and the historical "resilience" shown by the UK's renewable sec- tor compared with other European markets. MB EnErGY Levy hikes batter Iberdrola's earnings Iberdrola's core earnings fell 7 per cent to €7.2 billion (£5.9 billion) in 2013, hit by Spanish levy hikes. In the UK, Scottish Power's generation and supply busi- nesses reported earnings before interest, tax, depreciation and amortisation (Ebitda) down 11 per cent from the previous year to €320 million (£263 mil- lion). That reflects the closure of Cockenzie power station in March, a rising carbon tax and the devaluation of the pound against the euro. The UK networks fared some- what better, increasing Ebitda 0.2 per cent to €939 million (£773 million), with a growing asset base offsetting currency effects. UK levies cost the company some €250 million (£210 mil- lion), mainly as a result of the Eco energy efficiency scheme. But it was in Spain the energy firm's finances really suffered, with regulatory intervention costing some €800 million (£660 million). WaTEr PWC suggests retail margins for PR14 PriceWaterhouseCoopers (PWC) has suggested that appropri- ate retail net margins for water companies should be between 0.5 per cent to 2.0 per cent for household activities and 1 to 4 per cent for non-household activities. Ofwat will set separate allowed revenues for whole- sale and retail activities for the first time at PR14. This will include two binding retail controls – one for household customers and one for non- household customers. PWC is Ofwat's delivery part- ner for the price review, and said a higher range was appropriate for the non-household segment because of the extra risks associ- ated with the introduction of competition in 2017. ELEcTrIcITY Bluefield adds to solar portfolio The Bluefield Solar Income Fund (BSIF) has bought its ninth large-scale solar plant. The investment company has entered into a conditional contract to acquire the plant, which is north of Swindon and has a peak capacity of 19MW, for £21 million. The solar plant is expected to be connected to the grid in March and will be eligible for 1.6 Renewables Obligation Certificates. It is being built by Wirsol Solar UK, and the developer will continue with the ongoing operation and maintenance at the site. Phase two of the London Array will not go ahead Listed water company shares are holding steady despite moves by Ofwat to bear down on investor returns. Moody's has warned that the regulator's plans to cut the weighted average cost of capital allowance to 3.85 per cent could scare off shareholders. Severn Trent topped £20 on the back of an unsuccessful takeover bid last summer before stabilising around £17-£18. UU's share price has climbed in the past two months to about £7.80. Stock watch Severn TrenT Share price, 2013/14 2,100p 2,000p 1,900p 1,800p 1,700p 1,600p 1,500p Feb 13 May 13 Aug 13 Nov 14 Feb 14 UniTed UTiliTieS Share price, 2013/14 Feb 13 May 13 Aug 13 Nov 14 Feb 14 800p 760p 720p 680p 640p

Articles in this issue

Archives of this issue

view archives of Utility Week - Utility Week 28th February 2014