Smart Energy Finances: Rough seas ahead for Thames Water

June 30, 2023 Editor

Smart Energy Finances: Thames Water — Image courtesy 123rf

This week’s Smart Energy Finances looks at Thames Water, which is reportedly at risk of being placed under special administration due to a significant debt pile.

Also on the radar are an €8 billion credit facility for Dutch-German TSO TenneT, which is in the middle of potentially a full operations sale to the German government, and an equity financing round for tech startup 1KOMMA5°, which now boasts unicorn status.

Troubled waters for UK’s biggest water utility

UK ministers and water regulator Ofwat have started discussions about the possibility of placing Thames Water, the country’s largest water utility, into a special administration regime, according to Sky News reportage.

The talks, which involve the Department for Environment, Food and Rural Affairs (DEFRA), Ofwat and the Treasury, remain at a preliminary stage and relate at the moment only to contingency plans, which may not need to be activated.

Under the regime, Thames Water would be placed into temporary public ownership, parallel to the situation with Bulb Energy after collapsing. The electric utility has since been acquired by competitor Octopus Energy.

Earlier this week, Thames Water’s CEO Sarah Bentley announced her resignation with immediate effect, less than three years after starting in September 2020.

Earlier this year, the utility reportedly hired investment bank Rothschild and international law firm Slaughter and May under pressure of managing a £14 billion ($17.7 billion) debt pile.

On Thursday, Ofwat released an official statement on the matter, claiming that although Thames Water has had significant issues to address, including its environmental record, leakage performance and financial resilience, their liquidity yet proves a strength.

“…that is all in the context of a company that has strong liquidity – [Thames Water] recently received £500 million ($630 million) from shareholders and has £4.4 billion ($5.5 billion) of cash and committed funding,” stated an Ofwat spokesperson.

Thames Water serves 15 million customers in London and the Thames Valley.

TenneT’s pre-sale €8 billion credit facility

Dutch-German utility TenneT has announced signing of an €8 billion ($8.7 billion) credit facility, as it continues to mull over the sale of its operations to the German government.

The potential sale was announced earlier this year in February, at which stage the TSO’s financing needs approximated €15 billion ($16 billion). State funding, they claimed, was being considered a prime structural solution.

TenneT currently operates the Dutch high voltage grid as well as part of the German high voltage grid, although they have stated that both the Dutch and German governments prefer to fund, control and own their national electricity grid.

In announcing the credit facility, the utility stated that “such [a] potential transaction would enable the creation of two strong national players, controlled and funded by their respective governments, and cooperating in driving the energy transition.”

The credit facility, which has a tenor of 2.5 years, is hailed by TenneT as one of the largest single tier ticket credit facilities in Europe since 2020.

The facility is provided by TenneT’s existing relationship banks, namely BNP Paribas (Bookrunner), ABN AMRO, BNG, Commerzbank, Deutsche Bank, ING, Rabobank, Santander, SMBC and UniCredit as mandated lead arranger.

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Tech startup raises €215 million; becomes unicorn

Hamburg-based tech startup 1KOMMA5°, after raising €215 million ($233.5 million) in equity, has reached €1 billion market valuation ($1.1 billion).

The funding round saw US tech investor G2VP as lead investor and a new shareholder for the newly-minted unicorn company.

Heartbeat diagram. Image courtesy 1KOMMA5°.

The 23-month-old startup, which focuses on emobility, storage and solar solutions, stated the funds surpassed their goals of €150 million ($162.9 million) as they look to open a new R&D site in Berlin.

The company has been looking to expand its portfolio of smart solutions, namely an energy management and virtual power plant solution centred around Heartbeat, their energy IoT system.

Stated the company in a press release: “We have also set aside an additional €215 million euros in re-participation options, which can be paid as part of the purchase price for new acquisitions.

“This enables us to invest up to €430 million ($470 million) in total into the vertical integration of the value chain and double down on tech development around Heartbeat and our virtual power plant.”

The raised equity and unicorn status was announced at the same time as their acquisition of Danish solar tech provider Viasol.

With operations and employees in Germany, Sweden, Finland, Italy and Australia, the acquisition expanded their reach into a sixth market, Denmark, and enables the integration of Viasol’s frequency optimisation algorithm in Heartbeat, enabling dynamic tariffs and frequency regulation for Danish customers.

For the latest in finance and investment news coming out of the energy industry, make sure to follow Smart Energy Finances Weekly.

Cheers,
Yusuf Latief
Content Producer, Smart Energy International