United Utilities is getting ready to put the group’s renewable energy business - United Utilities Renewable Energy Ltd. - up for sale.
In April 2021, the group’s board of directors approved a plan to market the group’s renewable energy business.
The process is expected to commence this month and will involve the sale of assets – primarily property, plant and equipment – with a carrying value of £65.5 million in the group’s consolidated statement of financial position at 31 March 2021.
The decision to sell follows a review of the company’s strategy. Until July last year its principal activity was to develop renewable energy generation activities. Since July 2020 the firm has no longer been actively seeking new development opportunities –its main activity since then has been the operation and maintenance of the existing energy generation assets.
The water company said the sale will support acceleration of the group’s carbon initiatives, with the group continuing to benefit from the output of the renewable energy generation over the long term while being able to reinvest sales proceeds in other low carbon projects.
In addition to this, United Utilities group and its joint venture partner, Severn Trent PLC, each subscribed to £32.5 million of additional equity share capital issued by Water Plus, with a simultaneous cancellation of their respective revolving credit facilities extended to the joint venture.
Accordingly, the group’s equity investment in the Water Plus joint venture increased by £32.5 million, with the £14.2 million share of joint venture losses recognised against the £32.5 million revolving credit facility during the year being reallocated against the equity investment to bring its value down to £18.3 million.
Commenting on the prospective sale in the group’s annual financial results published earlier the week, United Utilities said:
“Our portfolio of renewable energy assets is operating satisfactorily and our investment has delivered the returns that we targeted. Having maximised the opportunities to date and established long-term contracts to secure a proportion of our renewable energy out to 2045, we are now looking at how we can recycle our investment in order to achieve further strong returns and take the next steps in our plans to achieve net zero by 2030.”