Utility Week

UTILITY Week 11th November 2016

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

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Finance & Investment This week Dong to quit oil and gas for renewables Firm plans exit as fossil fuel revenues fall and wind power construction revenues rise Danish energy company Dong Energy has announced it will exit the oil and gas business to focus on renewables. The group said there is currently no timetable for the completion of the process. In its financial results for the first three quarters of 2016, the group reported a 10 per cent drop in revenue to DKK49.7 billion compared with the previous year. It said this was primarily the result of significantly lower oil and gas prices and lower gas sales, and was partially offset by higher activity from construction contracts in wind power. Generation from offshore wind power amounted to 4.2TWh, in line with the first three quarters of 2015, as generation from new offshore windfarms was offset by lower wind energy content than in the same period in 2015 (88 per cent compared with 96 per cent) and lower availability. Meanwhile, oil and gas production amounted to 27.6 million barrels of oil equivalent in 9M 2016, down from 29.3 million in 9M 2015. Operating profits (Ebitda) increased by 16 per cent to DKK17.2 billion in 9M 2016, with wind power represent- ing DKK2.4 billion of this increase. Gross investments were DKK5.6 billion in Q3 2016, 70 per cent of which were in the development and construction of a number of windfarms: the Burbo Bank extension, the Walney extension and Race Bank in the UK, and Borkum Riffgrund 2 in Germany. LV ENERGY Flexible energy could save £8bn A smarter, more flexible power system which takes advantage of low-carbon innovations and technologies such as battery storage and demand response could save the UK £8 billion by 2030, according to research from think tank Policy Exchange. Its report calls for a complete overhaul of the current system to accommodate emerging tech- nologies, including wind and solar power. The think tank rec- ommends the removal of several regulatory and policy barriers to create a level playing field and negate the UK's reliance on dirtier forms of electricity. Author Richard Howard said: "Making the power system smarter will also mean it can provide cheaper and cleaner electricity. The current set of policies is encouraging a growth in dirty diesel generators." WATER NI Water fined £13k for discharge NI Water has been convicted and fined a total of £13,000 at Newtownards Magistrates' Court for causing a polluting discharge. On five dates from March 2014 to July 2015, there was a discharge of sewage effluent from the NI Water wastewater treatment works at Moneyrea, County Down. On 14 March 2014, a water quality inspector, acting on behalf of the Northern Ireland Environment Agency (NIEA), observed a discharge of sewage to the Blackwater River, Co Down. Further investigation traced the discharge to the Moneyrea treatment works. On four further occasions, the NIEA found this discharge to be recurring. Samples taken at the time confirmed that the discharge contained poisonous, noxious or polluting matter. ENERGY UK Carbon Price Support 'at risk' Carbon Price Support is "under threat", despite making "remark- able progress" in decarbonising the UK's electricity system. Analysis from think tank Sandbag found that UK coal gen- eration looks set to drop 66 per cent this year, meaning an 82 per cent fall between 2012 and 2016. The group said this fall is entirely responsible for the 18 per cent drop in UK CO2 emissions because net emissions from other sectors are unchanged. However, Sandbag warned that if the government caves in to pressure from industry voices, such as manufacturers, the mechanism could be scrapped, causing emissions from coal generation to creep up again. Dong prepares for a renewable future UTILITY WEEK | 11TH - 17TH NOVEMBER 2016 | 15 Stock watch 10.2 10.0 9.8 9.6 EDF SHARE PRICE, 2 - 8 NOVEMBER 3 Nov 4 Nov 7 Nov 8 Nov 12.0 11.5 11.0 10.5 10.0 9.5 EDF SHARE PRICE, SEPTEMBER - NOVEMBER Sep Oct Nov Shares in EDF fell 4.7 per cent on 4 November as it issued a second profit warning in less than two months aer nuclear-plant outages were extended by France's nuclear regulator. Shares fell from €10.14 to €9.66. As UW went to press, shares had recovered somewhat, trading at €9.97. Shares in the utility have been falling gradually since mid-September, when the UK government gave the conditional green light for Hinkley Point C to be built.

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