Utility Week

UTILITY Week 17th July 2015

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16 | 17TH - 23RD JULY 2015 | UTILITY WEEK Finance & Investment Stock watch 400 350 300 250 DRAX SHARE PRICE, 8 - 13 JULY 8 Jul 9 Jul 10 Jul 13 Jul 450 400 350 300 250 DRAX SHARE PRICE, 10 APRIL - 13 JUL 20 Apr 5 May 18 May 1 Jun 29 Jun 15 Jun 13 Jul The share price of generating giant Drax plummeted 30 per cent in three hours last Wednesday, following a Budget announcement by chancellor George Osborne that he was axeing renewables exemptions to the Climate Change Levy with effect from next month. The Treasury hopes to raise £450 million in the current financial year from the change, but it saw the Drax share price tumble from 350p to 250p. This week Drax faces £90m hit in climate levy change Generator sees its share price plummet by 30 per cent over the period of the Budget speech Generating giant Drax has slammed the Treasury's shock decision to axe renewable energy exemptions to the Climate Change Levy, saying it stands to lose £90 million in earnings over the next two years. Drax, which has invested heavily in converting its coal- fired units to burn renewable biomass, said it initially estimates the change imposed by chancellor George Osborne will cost it in the region of £30 million in 2015 and £60 million in 2016. Drax chief executive Dorothy Thompson said: "We are surprised and disappointed at this retrospective change to a support regime which has been in place since 2001 specifically to encourage green energy and support renewable investment decisions." The generator saw its share price plummet by 30 per cent over the period of Osborne's Budget speech last Wednesday (see Stock watch, below). While Drax is expected to be the hardest hit by the changes to the Climate Change Levy exemptions, Infinis, which invests in onshore wind and landfill gas, saw its share price fall from 195.25 pence to 164p. Analysts have predicted renewable generators face a 5 per cent hit on their earnings, while renewables funds could see their earnings hit by 3 per cent. Greencoat UK Wind saw its share price shed 3 per cent in value, while Foresight Solar Fund said the change will affect 3 per cent of its revenues. Renewable UK slammed the move as a "punitive measure" against the industry. JA ELECTRICITY Anaerobic digestion sector to lose £11m The anaerobic digestion industry has been hit with an £11 million cut by the Treasury, according to the Anaerobic Digestion and Bioresources Association (ADBA). The group has calculated that the removal of the Climate Change Levy exemption for renewables, announced in last week's Budget, will cost the AD industry around £11 million in revenue each year. The Budget's small print outlines that renewable electric- ity will no longer be exempt from the Climate Change Levy, stating: "This change will correct an imbalance in the tax system by preventing taxpayers' money ben- efiting renewable electricity gen- erated overseas, and by helping ensure support for low-carbon generation provides better value for money for UK taxpayers." WATER Thames gives nod to Tideway Tunnel bid Thames Water has named the special purpose company Bazal- gette Tunnel Ltd as the preferred bidder to deliver the Thames Tideway Tunnel. The consortium of Allianz, Amber Infrastructure Group, Dalmore Capital and DIF is in line to own, finance and deliver the £4.2 billion super sewer project. It was chosen ahead of a consortium led by Canadian pension fund Borealis in the final "revise and confirm" round. Thames Water has managed the procurement process for the infrastructure provider – which will be independent from the water company and have its own licence from Ofwat – and has selected the contractors that will build the tunnel. Bazalgette Tunnel will now take over responsibility for managing the contractors and overseeing the construction of the super sewer. It will be chaired by Sir Neville Simms, with former Crossrail programme director Andy Mitchell as chief executive. WATER Rural framework contractors chosen Scottish Water has named 58 small- to medium-sized (SME) contractors to deliver its £3.5 bil- lion investment programme. The water company will use this framework of rural contrac- tors to support its construction alliance partners in the delivery of construction and maintenance projects between now and 2021. The companies were selected following an extensive procure- ment process, and will deliver skills and roles including pipe fitting, pipe laying, electricians, electrical and mechanical fitters, welders, labourers, and water and wastewater repair squads. At the sharp end: Drax hardest hit by CCL change

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