Utility Week

Utility Week 18th April

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18 | 18th - 24th April 2014 | UtilitY WEEK Finance & Investment This week Davey flags delay to new-build gas plant The first capacity market auction will focus on mothballed plant, leaving new-build in limbo The building of new gas-fired power stations could be delayed for another year, energy sec- retary Ed Davey indicated last week. Gas developers are gearing up to bid into the first capacity market auction in December and build new plant by winter 2018/19. However, Davey told the Energy and Climate Change Select Committee that new plant was not expected to get contracted until next year. Davey said: "Our expectation in the first capacity market auction is that we will see plants that are currently mothballed, or plants that would otherwise close, coming forward. It might not be until the second capacity market auction at the back end of 2015 that we may need new plant to come forward to be built." The remark, dropped into a parliamentary inquiry into the unrelated December power cuts, sent ripples through the industry. ESB is building a gas-fired plant at Carrington, which will be classed as "new" for the purposes of the capacity market. Michael Dodd, GB regulation manager, said he was "surprised" at Davey's comment. Intergen plans to bid two gas power stations into December's auction, according to European general manager Mark Somerset. Waiting until 2015 could mean losing out on favourable contracts. He said: "The longer the delay, the higher the cost." The capacity market is subject to state aid approval from the European Commission, which could take months. MD rEnEWAblEs RWE Innogy seeks partner for Galloper RWE Innogy is seeking a new equity partner for Galloper off- shore windfarm, following SSE's shock withdrawal last month. The German-owned renewa- ble developer "remains commit- ted" to the 340MW project and both companies will continue to develop the finance strategy, said a spokesperson for RWE Innogy. The windfarm, off the Suffolk coast, got development consent last May and is expected to involve between £18 million and £20 million of investment. SSE is pulling out of four offshore wind schemes in a bid to "streamline and simplify" the business, while freezing prices for household customers. It said Galloper was not expected to offer a competitive return com- pared with its other investments. pAn-UtilitY Green bond raises £620m for Iberdrola Iberdrola has become the second European utility to issue a green bond, raising €750 million (£620 million) for renewable energy and smart metering projects. The bond was four times oversubscribed despite yield- ing only 2.5 per cent interest annually, the lowest rate offered by Iberdrola to date, in a sign of strong investor demand for green products. The Spanish utility, which owns Scottish Power, will benefit from a reduced cost of finance and a longer debt profile, with repayment scheduled for Octo- ber 2022. Environmental audit special- ist Vigeo certified that the bond, which refinances existing debt, would go to green projects. French utility EDF was the first large corporation to issue a green bond last November, rais- ing €1.4 billion. Prior to EDF's move, the majority of green debt was issued by organisations such as the World Bank and the Euro- pean Investment Bank. GAs Dart AIMs for £40m in next month's IPO Dart Energy is aiming to raise £40 million when it floats on London's Alternative Investment Market (AIM) next month. The exploration and produc- tion company, which is one of the leading companies in the fledgling shale gas sector in the UK, is expected to have its initial public offering (IPO) on the AIM on 12 May. Dart Energy has shale gas exploration sites in Cheshire, Staffordshire, the East Midlands and South Wales; it also has coal-bed methane operations in Scotland. New gas plant will have to wait at least one year Drax is to get subsidies for its biomass generation faster through a first-of-a-kind £80 million finance agreement with Lloyds Bank, announced on Tuesday as Utility Week went to press. Under the agreement, Lloyds advances payment to Drax for Renewables Obligation Certificates (Rocs), which can otherwise take more than 12 months to come through. The generation company earns Rocs for renewable electricity produced at its Yorkshire power plant. It sells these to electricity suppliers to allow them to meet their green power obligations. Michael Scott, head of corporate finance at Drax, said he was "very pleased" with the arrangement, which he said was "proving critical to delivering effective cash flow management". Drax is currently trading at around 740p. 820 780 740 700 660 Stock watch Drax share price, 14 March 2013 - 14 March 2014 14 Mar 2013 14 Jun 14 Sep 14 Dec 14 Mar 2014

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