A number of MPs have called for the National Grid to be broken up to revolutionise the energy supply of the UK. The National Grid runs the country’s electricity system and is one of the 20 largest companies in Britain with a £36 billion market value. Now, MP’s on the cross-party select committee believe that the company should be split up due to various conflicts of interest within the organisation. However, shareholders may find that such a decision could prove costly as shown by past attempts to shake up the company – Energy Secretary, Amber Rudd, proposed revolutionising the way the National Grid was run and as a result shares dipped significantly, although they later improved. There are three different sections of the company – it owns assets like interconnectors that bring over foreign power to the UK, it runs the system to ensure that lights stay on and it owns the pylons and wires that carry electricity around the UK. In recent years, the company’s imports of power from abroad have proved especially profitable for the organisation as the country has been reliant on imports of electricity to make sure the power keeps running. The company posted annual profits last month, spurred by the £123 million in operating profit from the interconnector with France, which is an increase of 19% on the year before. However, critics argue that the National Grid should not be in possession of such a profitable asset, while also running the system that takes out and uses power from it, although the company say that safeguards have been put in place to ensure a separation of the two functions. There are now consultations between Ministers about the structure of the company, with company chiefs saying that they are still considering splitting it up entirely. National Grid say that they are currently still in talks with the government and regulators to make sure that they keep managing any potential conflicts.

The state oil company of Kazakhstan has tightened its grip on its UK based unit over opposition from some of its independent directors and has set up a further boardroom battle at another London based Kazakh oil firm. KazMunaiGas, a national company which is fully owned by the Kazakh state called an extraordinary general meeting on Friday to go over its relationship agreement with KazMunaiGas Exploration Production, the London based subsidiary which it holds a 63% stake in. The firm also offered to buy out and minority shareholders who were not happy with the changes that were enforces. KMG EP’s independent directors said that they would offer their resignations if the proposals got the green light and argued that they would massively weaken the protections given to independent shareholders. The strife between the Kazakh oil firm and its subsidiary is reminiscent of the long running tussle between mining company Eurasia Natural Resources Corporation and its independent directors from the UK. In 2013, ENRC left the London market under a could of corruption allegations and boardroom battles, which dealt a sizeable blow to the international reputation of Kazakhstan. This latest battle will be a major test of the country’s approach to investors from abroad as it prepares for a programme of ambitious privatisation. The central Asian country announced plans last year to float minority stakes in some of its biggest firms, which include NC KMG. The relationship agreements between the Kazakh oil firm and its subsidiary was introduced to protect minority shareholders when KMG EP listed 10 years ago and gave substantial power to the three independent directors of the firm. NC KMG is now arguing that further alterations to the agreement will be necessary in order to reduce bureaucracy and bring in plans that will make the operations of KMG EP more efficient. The proposed alterations would have to be approved by at least half of the minority shareholders who vote at the EGM on August 3.

Siemens has secured a wind turbine deal with Gamesa, a Spanish renewables group. The German company will pay 3.75 Euros per share to Gamesa shareholders as part of a deal that will see the two firms’ wind businesses combine to form the biggest turbine builder in the world, with a valuation of around 10 million Euros. The two companies have been in discussion about the terms of the terms of the deal since the start of the year and it has been decided that Siemens will take a 59% ownership of the combined entity. After the merger has been completed, the business will be listed and have its headquarters based in Spain, with an anticipated order backlog of around 20 billion Euros, with operating profits of 839 million Euros and annual revenues of 9.3 billion Euros. Furthermore, the companies hope the deal will lead to around 230 million Euros of earnings synergies every year, before tax and interest. The cash payment of 3.75 Euros per share by Siemens represents 26% of the Spanish firm’s share price of January this year, before it was announced that talks were taking place between the two companies. Gamesa’s shared closed at 15.475 Euros on Thursday before they were suspended the following day. Chairman of the Spanish firm, Ignacio Martin, said that the deal to merge with Siemens has come from a recognition of the company’s work over the past few years and is evidence of its commitment to long term generation value through the creation of substantial synergies which extend the horizon of profitable growth for the firm. He anticipates that the combined group will become one of the dominant players in wind turbine construction, adding that they are embarking on a new era along with a world leading player in the wind industry. He told investors that Gamesa will now be able to continue their work as part of a stronger organisation with a better ability to provide its customers with end to end solutions.

Two of the biggest life insurance firms in the UK have sealed investment deals in infrastructure as the sector continues to show its growing desire for physical assets. Insurance firm Legal & General has announced that is is to pump £65 million into Newcastle Science Central, which is a £350 million science and technology park that will be constructed on a 24 acre site in the city centre. Meanwhile, the Pension Insurance Corporation has said it will inject £100 million into debt secured on the new Thames Tideway Tunnel, or a ‘super sewer’, which is a project costing £4.2 billion and is expected to be complete in 2023. These are the latest in a series of deals secured by insurance companies as they show a growing trend towards investing in bricks and mortar assets. While infrastructure remains a small section of insurance firms’ overall operations, it is a sector that has seen rapid growth. One of the attractions of physical assets is that they offer cash flow in the long term to match the extended liabilities of insurers. This is crucial for firms such as PIC and Legal & General which specialise in pension products and annuity that can last for several decades. Furthermore, because it is often illiquid, there are often better returns offered in infrastructure than those available on other long term assets like corporate bonds of government. Black Rock’s Insurance Asset Management Team Managing Director, Patrick Liedtke, said that infrastructure debt ‘ticks all the boxes’ as it provides investment grade paper that is long dated and allows insurance firms to match their liabilities and assets. He added that the companies are using it to replace some of the more classic papers that they would have otherwise held. Earlier this year, Goldman Sachs Asset Management conducted a survey that found infrastructure equality and infrastructure debt are among insurers’ most popular asset clauses, with a significant majority intending to pledge more money into the assets than take money away.

UK engineering firm Mott MacDonald and Swedish planning firm Sweco have been jointly appointed by Transport Scotland as consultants for dualling a 29 mile stretch of the A96. The A96 stretches from Inverness to Aberdeen, with the proposed dualling stretch situated between Fochabers and Hardmuir. The two firms (MMS JV) will explore potential options for the work before then taking on the detailed design work. Transport Scotland say that the contract was worth up to £50 million and hopes the scheme will significantly reduce driving times between Aberdeen and Inverness. The group is planning to improve the whole 86 miles of the A96 by 2030 and is starting off by targeting the stretches that suffer the worst bottlenecks on a regular basis that result in widespread disruption and traffic congestion. The Fochabers to Hardmuir section of the road is mainly made up of single lane carriageway which passes close to or through various villages and towns. The two firms will start their joint venture this summer with their assessment and design work before embarking on the process of assessing the various possible route options, which is anticipated to take up to two years to complete. Along the full length of the new road there will be numerous grade separated junctions where several communities will see the creation of new bypasses, including Elgin and Forres. The work will also see the construction of new crossings at the River Spey, the River Lossie and the River Findhorn, along with the rail line between Inverness and Aberdeen. Earlier in the month, Transport Scotland announced a five month delay on the construction of the Queensferry Crossing. The original opening date of December 2016 has now been put back to May 2017 due to adverse weather conditions, specifically high winds.

High Speed Two (HS2) Limited has invited nine companies to tender for a works package worth £11.8 billion. Initially shortlisted in March this year, the nine firms have all been invited by HS2 officials to tender for the civil engineering package for the first phase of the project, which will cover Birmingham to London, and is worth up to £8.6 billion. Further on in the tendering process, firms who have been successful will then be eligible to start bidding for a phase 2a, which is worth another £1.8 billion – £3.3 billion of work. This phase will cover Crewe to Birmingham. The companies have each been invited to tender for the work packages, which include Long Itchington Wood Green tunnel to Delta Junction / Birmingham Spur (£900m-£1.5bn) and Chiltern tunnels and Colne Valley viaduct (£800m-£1.3bn). It is expected that the civil engineering contracts that will cover the 225km first phase of the scheme will be signed next year, with work set to begin on site the following year. Overall, phase one of HS2 is expected to create almost 15,000 jobs and apprenticeships in the construction industry. Meanwhile, David Cameron recently said that a Brexit vote would result in both HS2 and HS3 schemes being under threat. He said that if the UK elects to leave the European Union on June 23, this could lead to and end of the proposed investment levels in the rail sector. He added that while the Government would still try to maintain investments in the projects if we leave the EU, this would pose a significantly greater challenger than if we were to remain. Earlier in the year, Chancellor George Osborne said that £60 million would be funded into rail in order to make the connection between Manchester and Leeds faster by 30 minutes. The current budget for HS2 is £55.7 billion and is a major part of the Government’s ‘northern powerhouse’ scheme.

Plumb Center is leading the calls for the introduction of further boiler scrappage schemes. The success of the London Boiler Scrappage scheme so far has resulted in the company’s request and it is hoped that other local authorities will introduce similar schemes. The scheme is now just over four months old, and over a fifth of the maximum 6,500 vouchers have so far been issued, with a further 4,000 applications and rising currently being processed. The pattern reflects the one seen in 2010 during the National Boiler Scrappage scheme and shows the appetite of both landlords and homeowners to replace their inefficient boilers when a suitable incentive is on offer. This has resulted in Plumb Center seeing further potential for the scheme and is now encouraging other local authorities to follow London’s lead. Plumb Center’s Head of Sustainability, Tim Pollard, said that a significant amount of homeowners will grasp the opportunity to scrap their old boilers. He added that the success of the scheme comes as no surprise to him and he is convinced that the full target of 6,500 installations will be met in the near future. Mr Pollard said that the careful planning and execution of the scheme has been a major contributor to its success and learns from the successes and failures of previous similar initiatives. He continued that the scheme also provides a welcome boost for the heating industry, with many homeowners stalling on plans to update their heating systems because of the mild winter experienced this year. The London Boiler Scrappage scheme will provide up to 6,500 accredited private landlords and owner occupiers in London the chance to claim back £400 in cash upon the replacement of their inefficient but still working boiler (must be rated below 70% efficiency). Their inefficient system will then be replaced with a new ‘A-rated’ model, or a low carbon renewable heating system.

Welsh Water has confirmed that it is to give a £32 million boost to its customers. The additional funding has been made available by the non-profit company to go towards projects aimed at benefiting its customers, as the firm announced its results. The £32 million figure is the equivalent of the dividends paid by other companies to its shareholders, but because of the firm’s ownership model, this surplus is put back into expenditure that will see customers reap the benefits. The cash will be used to give extra financial help for customers having difficulties paying their bills; to invest in more renewable energy generation schemes, improve services for areas suffering persistent water supply problems, and to contribute towards the funding of the new Llys y Fran visitor centre in Pembrokeshire. The £32 million sum will boost the firm’s existing £1.7 billion capital investment scheme for the next four year spell, and comes in off the back of a series of positive results for the water firm. During the year, Welsh Water posted an £18 million underlying profit, with operating costs just shy of £300 million and capital expenditure of £279 million. Robert Ayling, Chairman at Welsh Water, said that he was proud and pleased to be able to report the great shape the company is in after his 15 years of ownership, in both financial and operational terms. He said that the primary purpose of the firm is to produce the highest possible standards for customers at the lowest possible price. He believes that the firm’s non-shareholder ownership model is able to deliver that. Chris Jones, Chief Executive, said that the firm’s unique model of ownership enables them to use funds that would otherwise be paid to shareholders to benefit its customers. He says that this helps reduce costs, which in turn brings down the cost of customer bills and generates more energy on the firm’s own sites.

The latest report from the Renewable Energy Association has claimed that the record growth seen in the renewable energy sector has been threatened by ‘turbulent’ policy changes. Although last year saw record high growth rates and employment levels, the report states that the renewable energy sector in the UK is to suffer from repeated policy interventions. The REA’s REView 2016 report, which was released earlier in the week, says that these interventions have ‘blind sided’ the industry. The data reveals that the impressive rates of growth in the renewable energy sector, which increased in value by 4% more than any other sector of the UK economy in 2015, is set to slow down over the next few years due to ‘severe and sudden’ changes in policy by the Government. The statistics gathered by the REA show that the sector’s total market value last year reached over £15.9 billion, which is an increase of almost £1 billion (£982 million) and a 6.6% growth rate. While the rest of the economy grew by only 2.5%, the renewables sector was able to add 4,760 jobs in the same space of time, which raised total employment numbers to 116,788. However, even though renewable energy sources accounted for 22.3% of power in the UK last year, the lack of movement in transport and heat generation, along with political uncertainty, has resulted in a ‘turbulent’ future being painted for the industry. Nina Skorupska, Chief Executive of the REA, said that 2015 saw another record breaking year for the renewable energy sector in Britain and once again saw the industry outperforms growth rates of the UK. However, she continued by saying that many business have been left reeling by the severe policy changes and deployment has started to slow down. Despite this, Ms Skorupska said that things will continue to grow as the industry will innovate and preserve.

The International Energy Agency says that the ‘golden age’ of natural gas has now been put on hold. Last year saw the consumption of natural gas in China grow at its slowest rate for 17 years, which, according to the world’s leading energy body, is said to be one of the factors that will hinder the commencement of the fuel’s ‘golden age’. The country, which is being transformed into a consumer-driven economy, has seen a deceleration in gas demand growth to around 4% last year, which was the slowest rate since 1998. That is a significant fall in average growth compared with the 15% rate between 2009 and 2014. IEA Executive Director, Faith Birol, said that China remains in the best position in terms of gas demand growth, however it has considerably slowed down from its previous rate. He says that as a consequence of this, the arrival of the golden age of gas has stalled. In industrialised countries from the US to Europe there has been subdued economic growth which has also contributed to the slowing global energy demand growth. Mr Birol said that this has created ‘headwinds’ for natural gas, at a time when it was anticipated that it would play a bigger role in the global energy mix. He also commented that the fall in gas prices, which can be linked to the collapse of oil over the last year and a half, has not resulted in a stronger than expected demand. Gas is now not just facing competition from cost-wise alternative, but also the new climate agreement signed in Paris, which has mobilised renewable technology support. As a result of all this, gas has found it difficult to compete. In the period up to 2021, global gas consumption growth will fall to an average yearly growth rate of 1.5%, compared with the 2.5% rate over the last six years.