Utility Week

UTILITY Week 5th September 2014

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UTILITY WEEK | 5TH - 11TH SEPTEMBER 2014 | 19 Finance & Investment This week GDF Suez sells half stake in UK wind Financing from Japanese banks worth £90m over 14 years will be used to fund new projects GDF Suez has secured a £90 million project financ- ing deal while at the same time selling a 50 per cent stake in its UK windfarm portfolio, in a bid to raise the funds needed to invest in new UK renewables projects. The company said on Thursday that it had signed a 14-year project financing agreement with Bank of Tokyo-Mitsubishi, Sumitomo Mitsui Banking and KfW. At the same time, the company said it had sold a 50 per cent stake in its 70MW wind portfolio to a fund managed by infrastructure investor Equitix, for an undis- closed sum. "We are pleased with these important milestones in the evolution of our UK renewables portfolio… the funds generated by this transaction will enable us to accelerate the development of new renewables projects in the UK," said GDF Suez Energy chief executive Steve Riley. GDF Suez will remain the operator of the portfolio, which includes projects based at Crimp, Flimby, and Sober Hill in England, together with Barlockhart, Blantyre and Craigengelt in Scotland. GDF Suez's windfarm interests contribute to a total generation capacity of almost 7GW, making it the largest independent supplier in the UK, with around 6 per cent of the UK's total generation capacity. Globally, GDF Suez's operational wind portfolio has a total output of 3.7GW, with a further 500MW under construction. JA GAS SSE sells pipeline business for £52.7m SSE has completed the sale of its licensed independent gas trans- port business to the Environmen- tal Capital Fund for £52.7 million. SSE Pipelines has more than 130,000 gas connections and pro- vides services to new residential and commercial developments. SSE's finance director Gregor Alexander said the sale will help channel funds away from assets that are not core to the company, and towards its generation busi- ness. "This disposal represents the latest step in the programme to significantly simplify the SSE group and secure proceeds and debt reduction estimated to total around £1 billion," he said. RENEWABLES Global investment declining, says IEA The International Energy Agency (IEA) has shown investment in renewables has fallen since 2011 and predicts it will continue to decline for the rest of the decade. The IEA's Medium-Term Renewable Energy Market Report shows global investment in renewable energy technolo- gies has fallen every year since 2011, when it peaked at almost $280 million. The figure was $250 million in 2013 and the agency predicts it will decline for the rest of the decade. The IEA reasoned that this could partly be attributed to the reducing cost of proven renew- able technologies, but warned that uncertainty over energy policy, particularly in OECD countries, is also hampering investment. PAN-UTILITY Fitch downgrades UK utilities Ratings agency Fitch has changed its outlook for the UK utilities sector from "stable" to "negative" due to weaker market fundamentals and increasing political and regulatory pressure. The move follows similar warnings from rating agencies Moody's and Standard and Poor's, which have both cited challenging market condi- tions as a reason to monitor the energy sector, as well as its biggest companies, Centrica and SSE. "The outlook revision is, in particular, driven by poor forecast profitability of thermal generation and increased political and regulatory risk, demonstrated by the recent Competition and Markets Authority investigation into the industry," Fitch said. Political pressure and "customer attrition" have put pressure on the companies, while the generation side of the sector faces continued difficult market conditions. More renewables projects being lined up Stock watch 1,000 900 800 700 600 500 400 UNITED UTILITIES SHARE PRICE, 2010-2014 2010 2011 2012 2013 2014 900 800 700 600 500 400 PENNON SHARE PRICE, 2010-2014 The share price for United Utilities and South West Water's parent company, Pennon, touched highs not seen since the recession ahead of Ofwat's publication of its draft determinations last Friday. Pennon, whose draft determination was published earlier in the year, hit 821.50p on 26 August while United Utilities reached 908p. Last September they were trading at 707p and 682.50p, respectively. 2010 2011 2012 2013 2014

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