Utility Week

UTILITY Week 1st September 2017

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Page 18 of 31

UTILITY WEEK | 1ST - 7TH SEPTEMBER 2017 | 19 This week Brexit curtailing EIB funds for UK energy Just one UK energy project has received funding from the European Investment Bank since March The European Investment Bank has funded just one UK energy project since the triggering of the Article 50 process to withdraw from the EU more than five months ago. The EIB's website shows that since the Article 50 notice was served on 29 March, the only UK energy project the bank has approved has been SGN's extension of the gas pipeline network to remote areas of rural Northern Ireland, which received €57.6 million (£53 million) on 8 June. In the three months leading up to the serving of the Article 50 notice, the EIB approved funds for six UK energy projects worth a total of €874.8 million (£805.9 million). According to The Times, the EIB placed a moratorium on UK projects aer the Article 50 process began in March. The EIB has been a significant source of support for energy infrastructure projects, particularly for newer technologies such as offshore wind turbines. However Anthony Froggatt, a senior research fellow in energy and environmental issues at the security think tank Chatham House, said in the year to date there had not yet been a "significant fall" in the volume of loans issued by the EIB for energy projects compared with 2016. Lawrence Slade, chief executive of Energy UK, said: "Leaving the EU will remove some significant sources of funding for energy projects, like the European Invest- ment Bank. Post-Brexit the UK must remain an attractive location for investment in order to keep the lights on, continue to reduce carbon emissions and provide afford- able energy to consumers." DB PAN-UTILITY Threat to investment following GIB sale E3G has warned there is a "very real threat of an investment hiatus" following the sale of the Green Investment Bank to a consortium led by Australian financiers Macquarie. The climate change think tank has urged the government to develop new instruments to secure capital for riskier green projects the private sector would be unwilling to back on its own. E3G director Ingrid Holmes told Utility Week she is "cautiously optimistic" that the organisation – now known as the Green Investment Group – will continue to focus on investments in the green economy. "Half the battle is understanding the technologies and the business model risks. They will continue to have the in-house expertise to undertake those functions." However, she cautioned that the organisation's new global remit will mean "less attention on delivering the energy policy objectives in the UK". "Obviously they are looking at global markets now… there's necessarily going to be a diversion of capacity." ENERGY Renewables deals fill investor demand A lack of investment opportuni- ties in conventional generation is driving an increasing flow of M&A deals for renewable energy around the world. EY's quarterly report on power transactions shows renewable energy accounted for 48 per cent of all deals globally in the three months to June 2017. There were more total deals globally in the power and utili- ties sector in the second quarter of the year compared with the first (134 against 115), but overall deal value declined by 32 per cent to $30.8 billion (£24 billion). EY said this reflects the fact that renewables deals tend to be smaller in size than conven- tional power transactions. ENERGY RWE sees earnings rise to €3.2 billion German utility giant RWE has reported an increase in earnings to €3.2 billion (£2.97 billion) in the first six months of this year. The firm said it was "satisfied" with its performance in the first half of 2017, and revealed adjusted earnings before interest, tax, deprecia- tion and amortisation (Ebitda) increased by 7 per cent over the same period last year. Net income was up by €457 million on the first half of 2016, to €2.7 billion. For the year as a whole, RWE said it continues to expect adjusted Ebitda of between €5.4 billion and €5.7 billion. Offshore wind: EIB had been a source of support Stock watch 40 30 20 10 0 RWE SHARE PRICE, THREE MONTH 2013 2014 2015 2016 2017 RWE SHARE PRICE, FIVE YEAR RWE's share price has continued to rise aer the German energy giant reported a 7 per cent rise in earnings to €3.2 billion for the first half of 2017. Aer years of decline, the stock has steadily gained value since the group announced a new strategy in December 2015, which included placing its renewables, grid and retail operations into separate company Innogy. At time of publication they were trading at €20.65, up from €19 on the morning of the results and roughly €11 in December 2015. 21 20 19 18 17 Jun 2017 Jul 2017 Aug 2017 Finance & Investment

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