Utility Week

UTILITY Week 14th July 2017

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

Issue link: https://fhpublishing.uberflip.com/i/847993

Contents of this Issue


Page 3 of 31

4 | 14TH - 20TH JULY 2017 | UTILITY WEEK Capacity auction targets set Business and energy secretary Greg Clark has confirmed the pro- curement targets for the upcoming four-year-ahead (T-4) and future year-ahead (T-1) capacity market auctions. 50.1GW Capacity for the T-4 auction. 2021/22 When capacity procured in the T-4 auction is set to come online. 1.1GW The increased capacity require- ment predicted for 2021/22 compared with the previous year. 6GW Amount of capacity to be procured in the T-1 auction. 300MW Reduction of capacity in the T-1 auction compared with National Grid's recommendation. STORY BY NUMBERS Seven days... National media Wastewater use on farms revised up The global use of untreated waste- water from cities to irrigate crops is much more widespread than previ- ously estimated, says a new report. According to the updated assessment [by the International Water Management Institute (IWMI)], nearly 30 million hectares are using untreated water within 40km of an urban centre. Some 800 million people, including farmers, vendors and consumers are said to be exposed to serious health risks. BBC, 5 July Australia needs Tesla battery to prevent summer blackouts, says regulator The head of Australia's energy mar- ket regulator is "concerned" about avoiding blackouts next summer and says the proposed Tesla lithium ion battery in South Australia is a "very important part of our sum- mer plan". The Australian Energy Market Operator chief executive, Audrey Zibelman, said the regulator would do everything it could to ensure the project was built within the 100-day deadline set by the Tesla founder, Elon Musk, saying missing that deadline was "not really an option". The Guardian, 11 July 2017 National Grid to import LNG from US shale The US shale boom will reach Brit- ish homes and power plants for the first time when National Grid takes delivery of its first US cargo of lique- fied natural gas this month. A UK-bound LNG carrier is scheduled to arrive at the Isle of Grain port in Kent on in July car- rying enough gas to meet around half the UK's average daily sum- mer demand. The Daily Telegraph, 5 July PR19 will bring 'significantly' lower Wacc for water firms W ater companies should expect a "significant reduction" in the weighted average cost of capital (Wacc) for PR19, regulator Ofwat has warned. Ofwat this week published the dra methodology for its forthcoming 2019 price review – PR19 – which sets out its expectations and requirements for companies preparing their 2020-25 business plans. It also gives early insight into the likely cost of capital, which will be confirmed in December when the regulator publishes its final methodology. Although the regulator would not com- mit to a number for the Wacc, David Black, senior director for Water2020, pointed to research from PwC last month that sug- gested the cost of equity – if it were set on the same RPI-linked basis as at PR14 – would be 3.8-4.5 per cent at PR19. This compares with the PR14 number of 5.65 per cent, which Black said is "quite a step down". The regulator has not yet set out its view on the second element that makes up the Wacc, the cost of debt, because this will be informed by market data. However, Black told Utility Week it is likely to be lower than in 2015-20. "All of that points to a significant reduction in the Wacc at PR19," he said. Richard Khaldi, water sector expert at PA Consulting Group and formerly a senior director at Ofwat, said the days of "easy money" in the water sector were over. "PR19 will be a tough review for companies, with a significantly lower cost of capital and a focus on operational out- performance," he said. "Ofwat will expect companies to deliver more for their customers, a more resilient network, and affordable bills. In this climate, companies will need real financial and operational strength to meet the demands of both customers and investors." Ofwat said it expects compa- nies to provide value for money bills and to "challenge them- selves to push the efficiency frontier". LV Analysis, p16 "We would like to see a strike price for offshore wind of £70/MWh or less" Dermot Nolan, chief executive, Ofgem. See Energy Summit, p12

Articles in this issue

Archives of this issue

view archives of Utility Week - UTILITY Week 14th July 2017