Pennon Group buys three renewable energy projects for £85m

Pennon Group has bought three more renewable energy generation projects in an £85 million deal, as part of its strategy to reach net zero emissions by 2030.

The water company told investors on Tuesday that its three sites in Buckinghamshire, Aberdeenshire and Cumbria are expected to generate more than 95 gigawatt-hours of electricity per year from solar panels.

The group, which owns South West Water and Bristol Water, expects the acquisition and construction costs to be around £85 million, with the sites to be operational sometime in 2025.

The latest deal adds to the recently acquired 40 GWh Dunfermline solar panel project in Fife, Scotland.

Together, these projects should enable Pennon to self-generate 40 percent of its total electricity consumption, bringing it closer to its goal of 50.

The group told shareholders: “The acquisition of these projects will generate attractive commercial returns, while also benefiting the group by increasing energy security and resilience by reducing exposure to future volatility in wholesale energy markets.”

Last year, Pennon allocated £160 million for investment in renewable energy generation.

It swung to a £8.5m pre-tax loss in the year to the end of March as it was hammered by extreme weather and higher costs.

But it still increased its dividend for the year by 10 per cent to £111.7m and paid a special dividend of £1.5bn.

That’s despite South West Water being fined £2.15 million in April for illegally dumping waste water into rivers and the sea around Devon and Cornwall.

Water utilities have come under scrutiny from political and regulatory forces over the past year, along with public anger over the state of infrastructure and the dumping of raw sewage.

Penny shares were down 0.7 percent in afternoon trading on Tuesday to 684 pence. Since the beginning of the year, they have lost about a quarter of their value.