Utility Week

Utility Week 13th February 2015

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UTILITY WEEK | 13TH - 19TH FEBRUARY 2015 | 17 Finance & Investment Stock watch 1.4 1 3.5 13.0 12.5 EON SHARE PRICE, 13 JANUARY - 10 FEBRUARY 13 Jan 20 Jan 27 Jan 3 Feb 10 Feb 2,200 2,150 2,100 2,050 2,000 SEVERN TRENT SHARE PRICE, 13 JANUARY - 10 FEBRUARY 13 Jan 20 Jan 27 Jan 3 Feb 10 Feb Utilities are under pressure following weaker US markets, RBC Capital utilities analyst Maurice Choy said. Germany's Eon saw its share price fall from 13.93 euros at the end of January to around 12.90 euros by 10 February. UK water company Severnt Trent saw its price fall from 2,199 pence to 2,036 pence. "The whole European utilities sector has come down around 4-5 per cent since 29 January," Choy said. "This is driven by weakness in US utilities, where they were negatively impacted by worries about Greek debt issues, and the potential for mid-year US rates increases as US jobs report was strong." This week UK's first tidal project gets £200m funding Construction of the £1 billion power scheme in Swansea Bay is scheduled to begin this summer The UK's first tidal power project planned for Swansea Bay has now secured £200 million in funding and is poised to begin construction this summer. The project developers have confirmed a £100 million invest- ment from InfraRed Capital Partners, which matches the investment made by Prudential, to smooth the way for a financial close in the summer, with construction sched- uled to begin immediately aer. The rest of the £1 billion scheme will be debt financed by up to 26 banks. Analysts at RBC Capital said last week that the devel- opers are seeking a 35-year support guarantee through the government's contracts for difference (CfD) regime at a strike price of £168/MWh. "A prior two-year cross-government Severn tidal power feasibility study could not see a strategic case for public investment in a Severn tidal scheme in the immediate term, yet Tidal Lagoon Power and its investors managed to make a business case of the project. Hence the chal- lenge will be for Tidal Lagoon Power to convince the gov- ernment of its findings and thereby justify a higher strike price," said an investor note from RBC Capital. "If success- ful, Tidal Lagoon Power plans a further five schemes, each with installed capacity up to 2GW," the note added. The government has estimated the UK's total theoretical tidal range resource at 25-30GW. Tidal Lagoon Power chief executive Mark Shorrock said: "The Swansea Bay Tidal Lagoon provides a scal- able blueprint for a UK-led global industry that delivers true value to the nation." JA ELECTRICITY Hinkley Point C nuclear deal delayed A final investment deal for the Hinkley Point new nuclear project could be delayed to as late as October this year due to negotiations between EDF and its Chinese project partner. Late last month, energy secretary Ed Davey said a final investment decision on the £16 billion nuclear power station was expected within "weeks, or months". But a report in The Times last weekend suggested a deal can only be expected by September or October. The report said the Chinese companies are refusing to invest unless the French government promises to bail out reactor developer Areva, if necessary, and cover cost overruns. The article claimed the French gov- ernment will agree, but working out a financial agreement for Areva will delay the final deal. The nuclear plant, the first to be built in a generation, is expected to begin operations in 2023. WATER UU starts £100m solar programme United Utilities (UU) has started a £100 million investment programme in solar panels as it seeks to increase its self- generation capabilities. The first £1.5 million has been spent on more than 5,000 solar panels at its Fleetwood wastewater treatment works. The company will invest the rest of the funds over the next five years. UU energy manager Neil Carroll said: "Our aim over the next five years is to create solar systems across a number of our sites in the North West, which will help us run parts of our pro- cesses using clean electricity." The water company is also planning to install wind turbines at a number of sites to reduce its reliance on grid-supplied electricity. ELECTRICITY South Hook CHP plans on hold Plans to build a 500MW com- bined heat and power (CHP) pro- ject at the South Hook liquefied natural gas (LNG) terminal have been shelved because of difficult market conditions. A spokesperson for the project said a final investment decision on the Pembrokeshire- based project will be deferred and construction put on hold. The project, led by Qatar Petroleum International Global Ventures, ExxonMobil Power and Elf Petroleum, was envis- aged to use the heat produced by the LNG terminal to meet its power demand or export surplus power to the grid. 'Scalable blueprint': Swansea Bay Tidal Lagoon

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