Utility Week

UTILITY Week 21st March 2014

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18 | 21st - 27th March 2014 | UtILItY WEEK Finance & Investment This week 'Too early to say' if Hinkley is good value carbon connect cross-party report inconclusive as European commission investigates state aid It is "too early to say" whether Hinkley Point C gives value for money, politicians concluded in a cross-party report published on Tuesday. While calling for political con- sensus on nuclear, a review of the sector by think-tank Carbon Con- nect questioned the price tag of the UK's flagship project. Equity investors in EDF Energy's planned new nuclear power station could achieve returns of around 20 per cent, according to the report – "substantially higher" than the 12 to 15 per cent typical of private finance initiatives. It is "difficult to judge the effectiveness" of govern- ment's negotiations with EDF Energy over the support package, the report went on, as the process was "neither competitive nor transparent". The remarks come as the European Commission investigates the Hinkley Point deal to determine whether it passes state aid rules. The Commission has expressed doubts the support, including a guaranteed power price of £92.50/MWh for 35 years, is justified. Changing the support package "would not be an impossible task if made necessary and politicians should work together to maintain consensus", the report said. That consensus would make nuclear cheaper, by reducing the risk for investors, it argued. The Carbon Connect report is the result of an inde- pendent inquiry jointly chaired by Conservative former energy minister Charles Hendry and shadow energy minister Baroness Bryony Worthington. It follows reports on the future role of fossil fuels and renewables in the electricity generation mix. MD EnErgY Eon's UK retail arm lifts group results Eon's UK supply profits provided a ray of sunshine in an otherwise gloomy picture for the German utility group as it announced 2013 financial results last Wednesday. Earnings before interest, taxa- tion, depreciation and amortisa- tion (Ebitda) rose 26 per cent to £296 million at the UK retail arm, attributed to cost cutting and a cold start to the year driving up consumption. The retailer raised prices by 3.7 per cent in December. Meanwhile, UK generation and upstream profits slumped by a third to £388 million, on the closure of Kingsnorth coal power station and a "barely profitable" gas generation fleet. Across the group, Ebitda fell 14 per cent to €9.3 billion (£7.8 billion), hit by a tough market for conventional power genera- tion. This was at the lower end of market expectations. rEnEWabLEs Developing offshore could yield £6.7bn The UK economy could gain £6.7 billion per year and 150,000 jobs by 2020 from the development of offshore renewable energy resources, according to a report by the Offshore Renewable Energy Catapult. The Catapult, an organisation set up by the Technology Strat- egy Board, said there were oppor- tunities for the UK to develop "world-leading capability" in the development, manufacture and deployment of offshore renewa- bles technologies. ORE Catapult chief executive Andrew Jamieson said: "This report clearly demonstrates why it is worth the investment now to develop and grow sustainable industries delivering energy from our offshore natural resources." WatEr UK technology not meeting its potential The UK's share of the global water technology market could be worth £8.8 billion by 2030 but urgent action is needed if it is to meet its potential, according to a report from the UK Water and Research Innovation Partnership (UKWRIP). Currently, the UK has just a 3 per cent share of the global market and must make substan- tial changes in the next three years if it is to catch up with countries such as France, the US, Japan and Germany. The report says the UK can boost its share to 10 per cent by 2030 if it takes steps including focusing more on commercial opportunities and increasing independent national testing. A focus on validation and demonstration facilities and a co-ordinated international marketing strategy are also vital, according to UKWRIP. Hinkley Point C: price tag questioned rWE shares rose 3 per cent to €29.33 this week, the biggest gain since January. the climb followed news that the german energy company would sell oil and gas production company DEa to investment company Letter One – which was set up by russia's fourth richest man, Mikhail Fridman – for €5.1 billion. the deal will see Letter One also take responsibility for €600 million of debt. 31.00 29.00 28.00 27.00 26.00 30.00 25.00 20.00 15.00 Stock watch RWE shaRE pRicE, 18 FEbRuaRy - 16 MaRch RWE shaRE pRicE, apRil 2013 - MaRch 2014 Apr 2013 18 Feb 4 Mar 16 Mar Oct Mar 2014

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