Utility Week

Utility Week 13th October 2017

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UTILITY WEEK | 13TH - 19TH OCTOBER 2017 | 11 This week Policy uncertainty is stifling investment Energy UK says certainty is vital to decarbonise the energy sector at the lowest cost to consumers A lack of clear, stable and predictable policy is deterring investment in Britain's energy sector, Energy UK has warned. A report from the trade body outlined a number of key concerns that it said would have to be resolved to decarbonise the energy sector at the lowest cost to consumers. The report's findings are based on 27 interviews and a roundtable discussion with industry companies and investors, which Energy UK held to gauge their views on current energy policy. One of the main problems highlighted was the lack of visibility over the support for low-carbon generation beyond the end of the current decade. The levy control framework expires in 2020/21, the future of carbon price support is uncertain and there is no timetable for future contracts for difference (CfD) auctions. Energy UK said predictable policy has become increasingly important because of extensive government intervention in the energy market. To address the concerns, Energy UK said clarity over the replacement for the levy control framework was needed "urgently" along with a commitment towards future CfD auctions. It urged the government to consider wider industry implications when making significant policy decisions, and to avoid any retrospective changes. The government should also deliver an annual policy statement, setting out forthcoming energy policy and the costs and benefits to domestic and non-domestic consumers. TG ENERGY Price cap will hit suppliers' profits Analysts have warned the intro- duction of a price cap could have a "severe" impact on the profits of energy suppliers. In a briefing note, Investec said even if Ofgem reassesses efficient cost benchmarks, the introduction of a cap could have "considerable financial and industrial impact" on suppli- ers and also affect half of the domestic market. The Investec note warned that the existing prepayment cap had already set a tough benchmark on efficiency, and "implies" an average price cap will be around £961 a year, £170 below the current average for a big six SVT. The saving is higher than Investec's previous estimate of £130, following the 12.5 per cent price rise by British Gas in August, which it said affected 30 per cent of the domestic accounts in the market. ENERGY Moorside delayed until late 2020s The proposed Moorside nuclear plant in Cumbria will not begin operating until at least the late 2020s, the chief executive of developer NuGen has revealed. The future of the huge 3.8GW project was thrown into doubt this year when Toshiba's nuclear arm Westinghouse, which was to supply the reactors, filed for bankruptcy protection in the US. Toshiba was then le as the sole shareholder in NuGen aer junior partner Engie jumped ship in April, exercising a "con- tractual right" to force Toshiba to purchase its 40 per cent stake. The Japanese tech giant has been hunting for new investors. In an interview with Reuters, NuGen chief executive Tom Samson said: "Clearly there will be a shi in the start date from 2025 to later in the 2020s, but the plant could still be up and run- ning before 2030." ELECTRICITY CCS could contribute £160bn to economy A carbon capture and storage (CCS) network on the east coast of England and Scotland could boost the UK economy by £160 billion, according to Summit Power. Summit's study says such a network could link clusters of industry and power generation in Scotland, Teeside and the Humber region and then trans- port CO2 to offshore storage. It adds such a network would generate £5 for the UK economy for every £1 invested in the £34 billion project. The study says it would help create or retain 225,000 jobs, equivalent to the UK's current oil and gas industry. Long-term subsidy regime open to question Stock watch 195 190 185 180 175 170 12 Sep 19 Sep 26 Sep 3 Oct 10 Oct CENTRICA SHARE PRICE, ONE MONTH Centrica stocks were hit hard last week by the announcement by prime minister Theresa May that the government will introduce legislation to cap energy prices. Nearly a billion pounds was wiped from the company's value as the share price plunged almost ten per cent to 173 pence. Since then, Centrica boss Iain Conn has spent more than £170,000 of his own money buying shares in the British Gas owner, possibly as a public vote of confidence in the company. CENTRICA SHARE PRICE, FIVE DAY 190 185 180 175 170 5 Oct 6 Oct 9 Oct 10 Oct Finance & Investment

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