Utility Week

UTILITY Week 24 10 2014

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UTILITY WEEK | 24Th - 30Th OcTObEr 2014 | 19 Finance & Investment This week SSE rating improves with networks focus ratings agency Standard & Poor's revises SSE's credit outlook from negative to stable The ratings outlook for big six utility SSE has improved as the company shis investment towards its networks business, according to ratings agency Standard & Poor's (S&P). S&P has revised the firm's credit outlook from negative to stable, reflecting its opinion that SSE will maintain a stable operat- ing performance and risk profile. The company's performance is supported by "a shi in investment toward low-risk regulated networks that will account for 40 per cent to 50 per cent of Ebitda", the ratings agency said. "In unregulated generation and supply, conditions remain challenging, but we believe there is limited downside from this point," S&P added. One of the key developments limiting risk for the company is the increased certainty that followed Scot- land's decision in the recent independence referendum to remain a part of the UK. In SSE's generation business, the company is also expected to benefit from tightening capacity margins and the upcoming capacity auctions, given the size of its thermal power fleet. Meanwhile, its decision to freeze retail prices until 2016 "reduces its exposure to political risk" arising from the ongoing Competition and Markets Authority (CMA) probe, which is set to conclude at the end of next year. S&P warned that the outcome of the CMA review could materially impact SSE as one of the UK's largest energy suppliers, and added that a downgrade is possible. A further upgrade is unlikely though, it said. JA EnErgY Prudential commits £100m to tidal power Prudential has committed to stand as the cornerstone investor in the £1 billion Tidal Lagoon Bay Project with a £100 million investment, the company said on Monday. Prudential said its investment represents the first step in the development of a network of coastal lagoons that will provide 8 per cent of the UK's electricity. Tidal Lagoon Power chief executive Mark Shorrock said: "Securing the backing of a world- renowned investment institution marks another major milestone for the Swansea Bay project and is a clear endorsement of our vision to introduce tidal lagoon infrastructure into the UK's low- carbon energy mix." The deal forms part of Prudential's commitment to invest, alongside five other major UK insurance companies, a total of £25 billion in the UK's infrastructure over the next four years. Construction work is due to start next year on the 240MW development, which will gener- ate 495GWh of electricity each year from 2018, when the project is expected to open. The 16-turbine lagoon project will become the world's largest tidal energy generator, produc- ing 90 per cent of the domestic energy in the Swansea Bay region, or 11 per cent of Wales's domestic demand, and helping the UK to meet its carbon reduc- tion targets by saving more than 236,000 tonnes of CO 2 each year. ELEcTrIcITY UK wind 'offers £60bn investment' There is £60 billion worth of investment opportunities in the UK wind industry in the short to medium term, according to Greencoat UK Wind. In an interim management statement (IMS), the renewable infrastructure fund said it was "actively evaluating" a number of "interesting opportunities". This comes a few months aer Greencoat UK Wind said it expected further "substantial growth" for the UK wind sector in the future and aer the fund invested in 90MW of additional wind capacity in August. This brought the net total installed capacity owned by Greencoat UK Wind to 271.5MW. Laurence Fumagalli, partner of Greencoat Capital LLP, said: "The market for utility scale wind assets remains very favour- able for independent and experi- enced buyers such as Greencoat UK Wind." Greencoat UK Wind's net asset value increased to £360.3 million at the end of September, or 104.8p per share – up from 102.7p per share on 30 June 2014. Up you go: S&P has revised SSE's credit outlook Stock watch Severn TrenT Share price, 15 - 21 OcTOber 1950 1900 1850 1800 16 Oct 15 Oct 17 Oct 20 Oct 21 Oct Severn Trent's share price hit a low of 1,834p last Wednesday but climbed back up to 1,951p as the market reacted favourably to its board restructuring announcement on Monday, which will see the number of directors cut from eleven to eight in January. Immediately after the announcement of two retirements, the price briefly dipped to 1,892p before returning to prices seen last week.

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