Utility Week

UTILITY WEEK | 25TH - 31ST MAY 2018 | 17 This week Thames Tideway to issue green bonds £175m of bonds to be issued by Bazalgette Finance achieve highest green evaluation score Bazalgette Finance will issue £175 million of index-linked green bonds this month to design, build and commission the Thames Tideway Tunnel (TTT) in London and maintain it for 125 years. Two tranches of £50 million will be placed with Aviva Life & Pensions UK, linked to the retail price index, and will mature in 2049. The remaining £75 million, to mature in 2052, will be placed with a different investor and linked to the consumer price index. The transaction, which will help to build the "super sewer" in London, has received an overall score of 95 out of 100, equivalent to an E1 – the highest green evalua- tion score from Standard & Poor's (S&P) Global Ratings. The green bonds will be issued under Bazalgette Finance's £10 billion multicurrency bonds programme, which was established in May 2016. S&P Global Ratings said it believes the transaction is "aligned with the green bond principles 2017". The over- all score of E1/95 was determined by taking a weighted aggregate of the subscores: transparency (88/100), governance (93/100) and mitigation (97/100). The TTT aims to manage the amount of sewage discharged in the River Thames and the growth in water and sewerage demand associated with London's growing population. It was also designed to ensure the resilience of the infrastructure to changing weather patterns associated with climate change, in particular warmer and wetter winters that are likely to result in more frequent combined sewer overflows. KP ENERGY National Grid pre-tax profit up 4% National Grid's chief execu- tive struck a positive note last week as the networks operator revealed underlying pre-tax prof- its up 4 per cent to £2.68 billion. Pointing towards a solid year of "significant progress and investment", John Pettigrew said it had delivered "strong operational and financial per- formance" across its UK and US businesses in 2017/18. Headline profitability fell 8 per cent to £3.45 billion, due to the £142 million restoration costs following a difficult winter and storm damage in the US. ENERGY Boost needed in low carbon investment The government has been urged to reverse collapsing investment in low carbon energy by review- ing the regime for supporting the sector before the next round of contracts for difference (CfD) auctions takes place in 2019. A report by the House of Commons Environmental Audit Committee recommends that the consultation into encourag- ing new low carbon generation could look at other fixed-price contract mechanisms that cut out the need for subsidies. The government announced in last year's Budget that it would offer no further support for low carbon energy beyond the £557 million earmarked in the next round of CfD auctions. The report says this is one of several policy changes that have contributed to a "dramatic and worrying collapse" in clean energy investment since 2015. ELECTRICITY Call for wave and tidal funding pot The rules governing the support of renewable projects should be changed to provide a dedicated pot for wave and tidal projects, the government has been told. Orkney and Shetland MP Alistair Carmichael has called for offshore wind to be reclas- sified as a mature technology under the CfD regime. Wind and tidal are currently grouped as less established technolo- gies with offshore wind, which accounted for all but a small share of the capacity procured through the latest CfD auction. Carmichael said: "It is pretty well accepted that offshore wind… is now a fairly mature technology. However, as a con- sequence of that development and the way in which the price of offshore wind has fallen, the full funding for developing technolo- gies is scooped up by offshore wind. A dedicated pot of develop- ment funding for wave and tidal power would be of transformative benefit to the industry." Super sewer: green bonds will fund construction Stock watch 2,600 2,400 2,200 2,000 1,800 1,600 SERVERN TRENT SHARE PRICE, FIVE DAY Jun 17 Sep 17 Jan 17 May 18 SEVERN TRENT SHARE PRICE, FULL YEAR Severn Trent stocks have gained around 3 per cent in value since the firm revealed plans last Thursday to create a new company for its Welsh customers called Hafren Dyfrdwy (see news story, p28). The shares started the day of the announcement trading at 1,974p each and by the time of publication had risen to around 2,041p. The shares are still down on the 2,138p they opened 2018 on, and down from a 12-month high of 2,544p. 2,060 2,040 2,020 2,000 1,980 1,960 15 May 16 May 17 May 18 May 21 May Finance & Investment

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