Utility Week

UTILITY Week 19th May 2017

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

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Finance & Investment This week Flow Energy owner puts brakes on sale Management team considers capital fundraising to avoid having to dispose of retail business Flow Group has revealed it is in the advanced stages of preparing a "significant" capital fundrais- ing initiative as an alternative to the sale of its energy retail business, Flow Energy. Flow Group aired its intention to dispose of Flow Energy in a February trading update when it said it would "actively pursue" a sale. It explained that, although the business "has pro- gressed well and is delivering growth", wholesale mar- ket volatility had caused gross margins to come "under pressure". It added that this pressure was exacerbated because "we have priced to compete with a range of new entrants offering reduced tariffs to customers to gain market share". At the time, Flow Group also said it hoped that the sale of Flow Energy would unlock capital for investment in its microCHP boiler business, allowing the technology to be fully commercialised for the European market. It insisted the boilers had the potential to be "market leading". In a fresh announcement last week, however, Flow Group said that while it is still in talks with a preferred bidder for its retail arm, concurrent discussions around the downsizing of its microCHP boiler business may impact its desire to dispose of Flow Energy. Should the sale not go ahead, the company will look to fall back on "a capital injection into the Group of in excess of £20 million". The statement also explained that, should any such fundraising take place, "it is likely that the investment will be made in the form of convert- ible securities and new equity". JG ENERGY Bristol Energy aims for profits by 2021 The managing director of the local authority-owned Bristol Energy has said the company aims to make a profit by 2021. Speaking to Utility Week, Peter Haigh said aer a "fairly challenging" first year, the firm is now on track with 80,000 customers and expects to be in the black by 2021. The company was launched in February 2016 by Bristol City Council to be a "force for social good" and had an original target date of 2019 to become profitable – subsequently revised. Haigh added the energy supplier should become "cash neutral", when it is "not a burden on the city in terms of needing working capital", about 12 months before it turns a profit. But he said this will depend on what Bristol City Council wants the company to do. "They may want us to reinvest funds back into the business or further alleviate fuel poverty," he added. ENERGY £43m for low-carbon infrastructure Scotland's low-carbon infra- structure is to receive a £43 mil- lion boost aer the devolved government awarded funding to 13 projects around the nation. The grants, which came via the Low Carbon Infrastructure Transition Programme, will be matched by at least £43 million of investment from public and private sector partners. "These projects have great potential to help us tackle climate change, and remain at the forefront of low-carbon and renewable innovation," said Scottish first minister Nicola Sturgeon, announcing the fund- ing at a conference in Glasgow. The projects include an innovative local energy system on Fair Isle, an energy storage development in Shetland and low-carbon heat networks in Dundee, Stirling, Clydebank and Glenrothes. ELECTRICITY UK back among top ten for renewables investment The UK is back in the top ten of EY's Renewable energy country attractiveness index (Recai), having climbed four places since October 2016. The latest index shows that the UK has halted its downward trend, having slipped to an all- time low of 14th place following Brexit and a Whitehall reshuffle that saw the Decc become part of a larger ministry, BEIS. Despite the improvement, the future of the UK's investment environment is uncertain due to a lack of clarity around targets and subsidies, the report said. Off the table?: Flow Energy disposal Stock watch 2460 2440 2420 2400 2380 UNITED UTILITIES, FIVE DAY SEVERN TRENT, FIVE DAY Water company shares took a dip on Tuesday aer the Labour party revealed plans to nationalise the sector if it wins power in the general election. United Utilities stock dropped 2.3 per cent to 1,000p and shares in Severn Trent decreased by 1.2 per cent to 2,400p. At the time of going to press, United Utilities had bounced back slightly to 1,010p while Severn Trent had fallen further still to 2,390p. 1030 1020 1010 1000 11 May 12 May 15 May 16 May UTILITY WEEK | 19TH - 25TH MAY 2017 | 21 11 May 12 May 15 May 16 May

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