Utilities

RWE typifies corporate Europe’s investment dilemma

24 Mar 2025

The $26 bln German energy group is scaling back US green projects to help save $11 bln. Activist Elliott wants the money spent on buybacks, but Berlin’s fiscal shift may offer opportunities at home instead. The question is how quickly a brewing EU investment boom will take shape.

Thames fix is acid test for UK, and privatisation

27 Feb 2025

Britain’s biggest water utility has received a number of rescue bids. If the likes of buyout group KKR can get a return while keeping Thames Water creditors onside, it would boost both the UK’s flagging FDI appeal and the global case for privatisation. That’s a big if, though.

Constellation mega-deal delicately orbits AI sun

10 Jan 2025

The biggest US nuclear power producer agreed to buy gas-fueled rival Calpine for $27 bln to help feed insatiable high-tech demand. Optimistic projections have wrong-footed electricity providers before. In this case, though, the price is cheap and hedged by paying in stock.

Ailing UK water sector gets a risky lifeline

19 Dec 2024

Ofwat will allow companies to raise prices and make higher returns. Britain’s water regulator is rightly helping groups fund 104 bln pounds of needed investment. But given one key beneficiary is shaky Thames Water, public patience with the sector may decline further.

Savvy US green investor merits White House backing

17 Dec 2024

Power provider PG&E is due a record $15 bln from a controversial Energy Department loan program for clean energy projects. Donald Trump mostly mothballed the office during his first term, but its returns are impressive. Elon Musk knows the value, too: Tesla was a big beneficiary.

Thames debt rejig is oddly good deal for creditors

25 Oct 2024

The ailing UK water utility wants bondholders to defer repayments and give it an extra 3 bln pounds. Investors defer a messy default now and earn an equity-like return on the new money. And they can hope that PM Keir Starmer will agree to price rises, lowering future losses.

AI sparks only dim odds of nuclear chain reaction

7 Oct 2024

Plans to reopen a Three Mile Island plant have created buzz about an atomic energy comeback. For $1.6 bln, however, Constellation’s site would power just one big data center. The economics may someday compete with solar, but it will take coordination as hard to manage as fission.

Thames creditors face messy flush, or deep rinse

30 Sep 2024

The UK water company is running out of cash and racing to raise equity. A new investor would want a big chunk taken out of its 16 bln pound debt load, which may fall heavily on bondholders who can’t put up new money. Even that may be preferable to a government-led overhaul.

Power grids’ low-wattage resources may spark M&A

13 Aug 2024

European electric utilities have to invest big to meet rising demand. Yet balance sheets are laden with debt and raising equity is tough. Some will have to sell assets, or whole companies. Iberdrola’s $5 bln acquisition of a UK peer at a decent premium could be the first of many.

Thames Water fix is a stretch, but possible

6 Aug 2024

The indebted UK utility’s struggles to raise the 3 bln pounds it needs imply impending doom. But while the details are tricky, there remains scope for the UK to offer guarantees or find a way to haircut creditors. A new investor armed with these could yet make a decent return.

India’s water stress is a growing sovereign risk

29 Jul 2024

Erratic rainfall is one reason the country's economic growth may slow to 7% this year. Too much and too little H2O affects everything, from cities to power plants to farming. Climate change coupled with weak state capacity is making it worse. Yet it's an underappreciated problem.

Britain builds moat around leaky Thames Water

11 Jul 2024

Regulator Ofwat will let UK utilities invest and earn more. That eases the risk that problems at highly indebted Thames Water infect peers. But impacting customer bills carries political risks, and Thames’ ability to attract fresh equity remains in question.

Green spending strain boosts infrastructure buyers

6 May 2024

GIP, soon to be part of BlackRock, is buying Allete, an energy firm that is set to spend over $4 bln on clean power. Listed utilities’ funding costs are rising while green upgrades demand big outlays, a tasty opportunity for infrastructure funds with $350 bln of capital.

Spain’s utility saga calls for tough balancing act

18 Apr 2024

The UAE wants to buy 40% of 22 bln euro Naturgy from its private equity owners. That would usually require a full takeover, but Madrid has form on protecting key infrastructure. Spain will have to balance its desire to retain control with the need not to scare its bidder away.

Thames Water fix requires everyone to take a bath

4 Apr 2024

One way to repair the ailing UK utility is to hike consumer bills. The government could also hose the holders of the group’s 17 bln pounds of net debt. That might make the politics of the sorry saga marginally less toxic – and even give Thames a shot at luring new investors.

AI’s power surge short-circuits longer-term plans

1 Apr 2024

Data centers account for 2.5% of the US grid, and machine learning is supercharging growth. Where and how to build megaplexes consuming as much electricity as a small nuclear plant are the immediate problems, but they’re solvable. Calculating future demand is the real conundrum.

UK’s leaky coffers are Thames Water’s lifeboat

28 Mar 2024

The utility is drowning in $19 bln of debt and may collapse in 2025 if its regulator doesn’t approve higher bills. A nationalisation could be the best solution but the government isn’t flush with cash. Unless PM Rishi Sunak breaks his fiscal rules, consumers will have to pay up.

Europe’s green giant is focusing on safer bets

21 Mar 2024

Iberdrola is upping investment on ageing power grids. The $79 bln Spanish utility is also buying out US unit Avangrid and allocating its biggest chunk of capex to the States. Both bets look likelier to pay off than renewable power and geographies with less generous subsidies.

RWE has a way out of its valuation hole

14 Mar 2024

The $26 bln German power utility has lost 22% of its market value this year. Low gas prices, higher rates and a lingering presence in polluting lignite are reasons why. The first two ought not to persist as headaches, and the last is something RWE could do more about.

Dead power deal shows limits of M&A futurology

2 Jan 2024

Avangrid and PNM have given up on a $8 bln merger after three years of waiting for regulatory approval. Yet investors repeatedly priced the target as if the tie-up were in the bag. Political twists can easily wrong-foot arbitrageurs. Trouble is, such twists may get more common.