Utility Week

UTILITY Week 27th June 2014

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UTILITY WEEK | 27Th JUnE - 3rd JULY 2014 | 19 Finance & Investment This week GIB to invest £1bn in offshore wind GIB declares 'path to sustained profitability' a reality once current portfolio is operational The UK Green Investment Bank (GIB) has said it will launch a £1 billion fund to buy stakes in offshore wind projects. Making the commitment in its annual results, the GIB said offshore wind made a "compel- ling opportunity" and that it was targeting its first offshore wind project by the end of 2014. Its 2013/14 results also revealed that it had committed £668 million to 18 renewable energy projects, alongside £1.9 billion of private money. The GIB's portfolio of 26 developments, once built, will have a capacity of 12.8TWh and is projected to earn taxpayers an average return of 8 per cent a year. Since its inception in 2012, the GIB has committed £1.3 billion, and most of the cash (88 per cent by value) is in construction. The bank recorded an operating loss of £5.7 million in 2013/14, down from a loss of £6.2 million in its first five months of operation. The GIB stated said it was "on track to reach sustained profitability" once its portfolio of developments had been built and was operational. Lord Smith of Kelvin, chair of the GIB, said: "We have emerged from our start-up phase as the most active investor in the UK's green economy… we backed 18 new projects, more than double our first year, committing an additional £668 million of capital." Business secretary Vince Cable called the GIB's plan for a dedicated offshore wind fund "a real boost for our industrial strategy in a sector where we have a strong competitive advantage". MB ELEcTrIcITY LCF funds running out quickly The funds for low-carbon gen- eration under the Levy Control Framework (LCF) are set to run out quicker than expected, according to Aurora Energy Research. A study on future power prices suggests they will fall quicker than the Department of Energy and Climate Change (Decc) has estimated. A chart published in March by Decc predicted power prices to be £68/MWh in 2020 and £80/MWh in 2030. However, Aurora predicted that these prices would be £46/MWh in 2020 and £41/MWh in 2030. John Feddersen, Aurora Energy Research's chief executive, told Utility Week that because the contracts for differ- ence (CfDs) will use the refer- ence price based on government figures, the amount needed to top-up actual power prices to the strike price will increase. "If the power price is lower than anticipated, expenditure is higher than anticipated," he said. Feddersen added that this would result in the government procuring lower amounts of renewable generation capacity than projected, and the addi- tional costs being passed on to consumers. Decc said it remained "confident the LCF can deliver the levels of low-carbon electricity set out in the delivery plan" published in December 2013. EnErgY Energy efficiency a 'national priority' Domestic energy efficiency must be treated as a "national infra- structure priority", according to a coalition of 20 organisations in the construction, housing and environmental sectors. The group, which includes the UK Green Building Council (UKGBC), the Energy Saving Trust, and the Association for the Conservation of Energy, wrote a letter to the Treasury warning that UK homes were "the coldest and draughtiest in Europe". The coalition said the govern- ment should direct up to £4 bil- lion a year in capital investment to fund a programme of energy efficiency. The letter said: "Domestic energy efficiency is one of the most cost-effective ways to achieve the government's three strategic priorities for energy infrastructure: controlling energy bills, tackling climate change, and unlocking invest- ment to support economic growth. "No other investment can achieve so much for individual householders and UK plc." Offshore wind: a 'compelling opportunity' Stock watch 240 230 220 210 200 infinis energy share price, 23 may-20 june 23 May 2 Jun 9 Jun 16 Jun 20 Jun 245 235 225 215 infinis energy share price, 17-23 june 17 Jun 18 Jun 19 Jun 20 Jun 23 Jun Shares in renewable energy company Infinis rose 8.9 per cent from 227.38p last Thursday, peaking at 247.7p the next day, after it revealed a hike in profits. In its first full year results since listing on the Stock Exchange, Infinis reported earnings before interest, tax, depreciation and amortisation of £148.4 million, up 18.3 per cent on the previous year. Chief executive Eric Machiels said the profit surge was due to strong wind and landfill gas performance.

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