Utility Week

Utility Week 7th August 2015

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

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UTILITY WEEK | 7TH - 13TH AUGUST 2015 | 15 Finance & Investment Stock watch 280 275 270 265 260 CENTRICA SHARE PRICE, 30 JULY - 4 AUGUST 400 350 300 250 200 CENTRICA SHARE PRICE, 2011-15 Centrica's share price plummeted 6 per cent to 266.70p per share from early Thursday morning when the company announced it would reallocate around £1.5 billion in investment from its struggling upstream arm to drive forward growth in its more profitable downstream supply and services business. Although the share price recovered to 270p a few days later, the price remains more than 30 per cent lower than in late 2013. This week Gas storage is 'dead' without subsidy Even sites granted planning permission will find it hard to raise finance without government help New gas storage projects will remain "dead in the water" unless developers can convince the government to subsidise them, the Gas Forum has warned. Speaking to Utility Week, Gas Forum managing director David Cox said that if project develop- ers could convince the govern- ment to sponsor strategic storage – which would be kept for emergencies and to deal with major problems of sup- ply – they would "effectively get a government subsidy". "The government has got to believe that more stor- age is needed in the market. Then it would change its strategy of not subsidising new, strategic storage. If it were to do that, and start putting money into new stor- age projects, that would obviously change the dynamic," he said. Last month, Halite Energy's Preesall gas storage site was granted planning consent by energy minister Lord Bourne. If built, it will act as a demand response facility, with gas entering the national system in response to market conditions. However, with seasonal price spreads having been depressed for some time, experts have warned it is unlikely to get financed. Cox argued that, other than the capacity problems Centrica Storage is having with Rough, there is "no really good news" in the pipeline for new storage pro- jects such as Preesall. "They are all on hold. They were all dead in the water two years ago and nothing much has changed since," he said. LV ENERGY Npower looks to Silicon Valley RWE has sent a team to Silicon Valley to research new technolo- gies that could help drive for- ward a change in the company's business model across Europe. Npower director of innova- tion Neil Pennington told Utility Week that parent company RWE has sent a "small, hand-picked" team to Silicon Valley for an initial six-month period and may later establish a permanent presence in the Californian tech hot house. "Our primary focus is on products and services for decen- tralised energy management," Pennington said. "Their mission is to identify new partners, technologies and solutions so we can come up with an initial business model for our markets in Europe." ELECTRICITY Drax half-year profits soar 18% Generating giant Drax has reported pre-tax profit of £120 million for the first six months of 2015, an increase of 18 per cent on the same period in 2014. The company saw a signifi- cant increase in biomass genera- tion to 5.2TWh, compared with 3TWh in H1 2014. Total electric- ity output was 14TWh, compared with 12.9TWh in H1 2014. Retail arm Haven Power reported sales of £629 million, compared with £513 million in H1 2014. Drax said the profit increase "reflects good operations" at Drax power station, while its growth in sales was "in line with strategic plans and good progress with large contracts". However, analysts have said that H2 results are likely to be hit following recent government cuts. Chief executive Dorothy Thompson said that while there are elements outside Drax's control, such as regulatory challenges and weak commodity markets, "the underlying fun- damentals of the group remain strong". GAS SSE to take £565m stake in gas fields SSE is to take a 20 per cent stake in four new offshore gas fields in a deal with E&P giant Total worth around £565 million. The move will bolster the reserves of the UK's second larg- est gas supplier as its existing fields continue to decline, and forms a part of the company's drive to explore new opportu- nities to meet its gas demand requirements. SSE chief executive Alistair Phillips-Davies said the move contributed to the company's drive to maintain a "balanced" portfolio of energy businesses. 30 Jul 31 Jul 3 Aug 4 Aug 2011 2012 2013 2014 2015

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