Utility Week

UTILITY Week 12th June 2015

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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UTILITY WEEK | 12TH - 18TH JUNE 2015 | 13 Finance & Investment Stock watch 395 390 385 380 375 370 DRAX SHARE PRICE, 4 - 9 JUNE 4 Jun 5 Jun 8 Jun 9 Jun 440 420 400 380 360 340 DRAX SHARE PRICE, APRIL - JUNE Apr May Jun Drax shares eased down to two-month lows after its trading statement on Monday 8 June indicated the generator continues to face challenging market conditions because of lower wholesale prices. Although shares traded up to highs of almost 381.50 after its interim trading statement, the share price slid the following day to hit lows not seen since early April at 373.70 pence. More on Drax's results, p28. This week Swansea Bay Tidal gets planning consent Chinese marine company on the verge of sign- ing long-term deal with Tidal Lagoon Power The UK's Tidal Lagoon Power received the greenlight from the government late on Tuesday to build the world's first tidal lagoon, at Swansea Bay, along- side its Chinese construction partner. The granting of planning consent was welcomed by both the developer and the wider renewables industry as an important milestone in the UK's drive to decarbonise the power sector. The £1 billion, 320MW project will see the forging of closer ties with the Chinese government, which is mak- ing steady inroads into the UK's infrastructure market. Tidal Lagoon Power is poised to sign an agreement with Chinese government-backed marine developer China Harbour Engineering Company (CHEC) within weeks to pave the way for future tidal power projects in the UK and across Asia. A spokesman for the developer told Utility Week it expects an agreement between the UK and China to be signed "by the end of this month, or beginning of next" as part of a Chinese state visit. The memorandum of understanding would build on a £300 million deal inked at the beginning of the month between the two. The Chinese company was selected as the preferred bidder to provide a marine works pack- age that will include the construction of Tidal Lagoon Power's Swansea Bay project. At the time, CHEC chief executive Lin Yi Chong said he had taken a "strategic decision to enter the UK infra- structure investment and construction market". JA WATER Thames Water profits recover Thames Water has recorded pre- tax profit of £335.8 million in its 2014/15 full-year results, a rise on the previous year that continues its recovery since a significant fall in 2012. The company posted pre-tax profit up £76.5 million from £259.3 million in 2013/14, with the improvement attributed to stable weather, reduced financing costs, and operating efficiencies. This pushed pre-tax profit above the £216.8 million reported in 2011/12, which then fell to £150 million in 2012/13. Thames Water found £150 million of capital efficiencies over the past five years (2010- 15), although total net operating costs increased by £48.4 million (3.7 per cent) to £1,348.8 million. Revenue increased by 4.3 per cent (£83.1 million) to more than £2 billion. Net debt was £9,552 million, up by £611.9 million from 2013/14. ELECTRICITY Only cable links worth £100m-plus will be tendered Only onshore transmis- sion projects with a capital expenditure value of £100 million or more will be consid- ered for competitive tendering, Ofgem has proposed. The regulator said the threshold would mean assets were tendered where benefits from cost savings and innova- tion significantly outweighed potential administrative and interface costs, and would be "likely to attract significant market interest". In a letter, Ofgem said it was consulting with stakeholders on how to define and apply its "new, separable and high value" criteria for proposed onshore electricity transmission assets, to ensure they offered value for consumers. ELECTRICITY Scottish Power gets consent for Glen App windfarm Scottish Power Renewables has received approval from South Ayrshire Council to push ahead with the development of the 33MW Glen App onshore wind- farm in Scotland. The proposed 11-turbine project will be built between Cairnryan and Ballantrae in South Ayrshire. It should be fully operational by 2017. Scottish Power already has two windfarms in South Ayrshire, Arecleoch and Mark Hill, which together have paid out more than £2 million in community benefit funding to local communities in four years of operation. Proposed Swansea Bay tidal lagoon

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