Macquarie Group Ltd., Australia’s largest investment bank, has bought two natural gas-fed power stations in the U.K. in a bet that profit from burning the fuel will rise after three years of declines.
Macquarie purchased the 540-megawatt Baglan Bay plant in Wales from General Electric Co. in October, Nicole Grove, a spokeswoman for the bank in London, said by e-mail yesterday. It acquired the 819-megawatt Sutton Bridge facility in eastern England from Electricite de France SA last month. The profit from burning gas next month, known as the clean-spark spread, fell 21 percent last year after dropping 48 percent in 2011 and 29 percent in 2010, according to data compiled by Bloomberg.
Banks such as Barclays Plc, Deutsche Bank AG and UBS AG have scaled back their energy and commodities teams in the past year as they try to cut costs. Utilities including GDF Suez SA have closed, mothballed or delayed at least 3.8 gigawatts of gas-fed generation capacity in the past two years in the U.K. and Germany, enough to power about 7.6 million European homes, according to data compiled by Bloomberg.
“Forward spark spreads are very low out to 2015 so a gas plant buyer must be taking a longer term view that spreads will improve,” Lakis Athanasiou, an independent equity analyst in London, said by phone on Jan. 14. Sutton Bridge has an enterprise value of about 160 million pounds ($256 million) while Baglan Bay may be worth 150 million pounds, he said.
The next-month spark spread was at 1.82 pounds a megawatt-hour today, down from 2.47 pounds on the same date last year and as much as 11.47 pounds in October 2009.
Baglan Bay has been halted since Oct. 27 while Sutton Bridge was generating 804 megawatts at 8 a.m. in London, National Grid Plc data show.
Macquarie hired Dan Briggs in September and Suthagar ‘Sid’ Rajeswaran in January as natural gas and power operations analysts for the bank’s energy trading team in London.