Utility Week

UTILITY Week 21st April 2017

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The Topic: Attracting investment UTILITY WEEK | 21ST - 27TH APRIL 2017 | 11 NEXT TOPIC: RESOURCE MANAGEMENT The next Topic will look at the issue of resource management for utilities. With regulatory allowances being squeezed and falling profit margins putting pressure on companies to reduce their expenditure, making the most efficient use of the available resources is crucial. This can involve making full use of the skills of the workforce and upskilling them, making opex efficiency gains, and finding new uses for old assets. Over the past five years (2012-16) the European Invest- ment Bank has invested more than €31.3 billion in the British economy. The total investment of the EIB Group (the European Investment Bank and the European Investment Fund) in the UK in 2016 was €8.1 billion. The UK Green Investment Bank (UKGIB) was created by the government, which provided it with the initial capital to invest. This was used to back green projects, on commercial terms, across the UK and mobilise other private sector capital into the UK's green economy. It has invested in 99 green infrastructure projects and seven funds, directly committing £3.4 billion to the UK's green economy into transactions worth £12 billion, with the other funding coming from other investment funds and sources. The UKGIB is currently being sold off by the govern- ment, with the privatisation process beginning last month. Australian bank Macquarie is poised to take over and there are fears that it could sell its existing stake in green projects and threaten the environmental creden- tials of the bank. Former business secretary Sajid Javid, who instigated the sale, said a "golden share" would be created that would enable the holder – a company formed specially by the government – to reject any changes to the bank's green ethos. EUROPEAN INVESTMENT BANK AND THE UK GREEN INVESTMENT BANK EIB investments in the UK economy came to €6.9 billion in 2016, making the country the 5th largest recipient of EIB loans last year. "At the end of the day, there's a huge amount of investment waiting to be deployed in renewable generation. You don't need stellar returns, however the one key element that kills confidence is uncertainty and change." • Tim Cornelius, chief executive, Atlantis Resources "Networks have a strong record of investing in vital infrastructure while improving performance and keeping costs low." • David Smith, chief executive, ENA energy strategy sets out a num- ber of goals, including a commit- ment to develop "simplified and longer" PPA contract terms with more commercial benefits for community energy groups. According to the document, Co-op Energy currently has 40 PPAs in place with community groups, compared with just nine in 2014, and it aims to increase that number to 60 in the next three years. This is also a sector that for- mer energy secretary Ed Davey states "will weather the political storm" and continue to grow and attracting investment at a grass- roots level. TOTAL EIB LENDING IN THE UK FROM 2012 TO 2016 Total: €31,283 million Energy Water, sewerage, solid waste, urban development €9,303 €8,885 30% 28% Source: EIB "There is a general feeling that community energy is in a 'labs' period, where the pipeline will be small, but innovation is the name of the game. We need to be ready to take off when the pendulum swings back our way." • Leo Murray, director of strategy, 10:10 COMMUNITY ENERGY SNAPSHOT >550 community energy groups Active in the UK Could be supplied with electricity from community energy schemes Leveraged from £7.4m of community energy feed-in tariffs Since 2010… Could be generated by 'energy citizens' (prosumers) And think government should do more to help local communities generate their own energy and keep profits in the local area 1m homes by 2020 44% of UK energy by 2050 76% of public support renewables 78% of public support community generation >7.4m of feed-in tariff payments >£50m in private investment >£23m of community benefit funds >155,000 hours of volunteer time 45% of spend goes to local contractors Source: Good Energy

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