Utility Week

UTILITY WEEK | 1ST - 7TH JUNE 2018 | 17 This week Decarbonising UK heat to cost £450bn Households expected to pay £100 to £300 more for heating in 2050 if system is decarbonised The cumulative cost of decarbon- ising the UK's heating system by 2050 could be as high as £450 billion, research for the govern- ment's infrastructure advisory body has concluded. According to a study by consultancy Element Energy & E4tech for the National Infrastructure Commission, all options for heat decarbonisation are "significantly more costly" than continuing with the status quo. The report estimates that under the worst case assumption in the study, the extra cost could be up to £450 billion. But its central cost assumption is that costs of decarbonisation will work out at £120 to £300 billion. The study estimates that the average annual cost of heating per household will be £100 to £300 higher in 2050 than in the status quo. However, the study says these figures have to be put in the context of the wider growth of the economy, which it expects to triple in size by the middle of this century. Another factor to be considered is the increased energy security resulting from reduced reliance on imported gas. The study finds that re-purposing the gas grid to deliver low-carbon hydrogen, if delivered safely and at scale, is the lowest-cost option for decarbonising heat. However it says it is "unproven" whether hydrogen can be safely delivered to the millions of buildings that will have to be retrofitted, adding that cost-effective con- version to hydrogen heating is likely to rely on another unproven technology – carbon capture and storage. DB WATER UU to invest £250m in resilience United Utilities (UU) will increase its investment in resilience measures from £100 million to £250 million dur- ing AMP6 by sharing outper- formance to benefit customers. The company said it aims to deliver value through greater use of innovation and technology alongside its £3.8 billion AMP6 capital investment programme. In its financial results for the year ended 31 March 2018, UU reported underlying operating profit of £645.1 million, up from £622.9 million the previous year. Revenue increased by just under 2 per cent to £1.7 billion, a reflection of regulatory revenue changes that were partly offset by the accounting impact of its non-household joint venture, Water Plus. Reported operating profit was £636.4 million for the period up from £605.5 million. ENERGY SSE 'robust' despite drop in profits Profits fell at SSE aer a year the company said presented "a number of complex challenges to manage", including plans to merge its household energy supply business with fellow big six supplier Npower and the looming price cap reforms. Adjusted operating profit from SSE's household supply business was flat at £260 mil- lion. It said: "While electricity tariffs increased to recognise rising non-energy costs, overall profits were also impacted by customer account losses and the introduction of price caps for certain customer groups, offset by ongoing efficiency savings". It also noted a boost from the cold spell, including the "Beast from the East". SSE also announced it will be upping its full-year dividend to 94.7p per share, up 3.7 per cent. WATER Severn Trent gets ready for the future Severn Trent is set to invest £100 million in its water business. The group's preliminary annual results show group turn- over rose by £56 million to £1.6 billion in the year to March 2018. It also made underlying pre-tax profits of £541 million, up 4 per cent on the previous year. Chief executive Liv Garfield said the company will invest £100 million to "get ourselves ready for the future". Garfield added Severn Trent has launched an innovation fund to help develop new ideas and will be investing £10 million in the next 10 years to "train the engineers and leaders of the future" at a new centre of excellence. Bills will increase to pay for decarbonisation Stock watch SSE SHARE PRICE, FIVE DAY 22 Oct 28 Oct 4 Nov 11 Nov 19 Nov SSE SHARE PRICE, FULL YEAR SSE shares have been largely unaffected by news of a fall in earnings in the company's full-year results for 2017/18. The share price briefly dipped from 1,424p to 1,400p as the decline was revealed last Friday, but recovered within the hour as investors digested the report. The shares have been trending upwards since mid-February when they were trading for about 1,185p. 1990 22 Oct 28 Oct 4 Nov 11 Nov 19 Nov Finance & Investment

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