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I guess the name change is a pretty good clue to what is going on. National Power becomes International Power, a clear sign that it intends to shed the stodgy local label of the ex National Grid company. The new company has over 6,000 MW of net generating capacity in a range of countries and is adding another 4,400 MW from plants under construction, mostly in the US. On top of that it has interests in another twelve advanced projects in five countries that could add a further 8,000 MW of net capacity.
Innogy is the stay at home business and describes itself as integrated energy company. It has 7,700 MW of generating capacity from a mixture of gas, coal and oil fired plant, giving it 8% of the UK market, and it has an energy trading division to ensure its 2.8m customers get the power they need. In addition it has a division called Regenesys that is developing fuel cell technology as a means of storing electrical power. Utility companies are usually slammed as being "ex-growth" but this one does have new projects lined up. The biggest is the 1,500 MW Staythorpe combined cycle gas turbine (CCGT) costing £430m that will start earning money in three years time.
A fundamental problem for the whole electricity industry is that storing the stuff on any reasonable scale is almost impossible. This makes life difficult for the generators because they have to build enough capacity to meet the highest expected level of demand. Yet, for most of the year, this peak capacity lies idle. If the fuel cell based Regenesys is viable it could be a very attractive business in the long term to help solve this problem of meeting peak demand. The plant at Little Barford in Cambridgeshire is designed to be capable of storing 120MWh of electricity and will be able to speedily provide 15MW of power, enough electricity for the needs of 15,000 people. Innogy was also recently in the news when it purchased the remnants of the Independent Energy business for £10m after it failed. The principle asset here was its client base of 240,000 customers.
While Innogy is going to be the boring stay at home IP is now the international gadabout. To emhasize its growth character the company has said it will not pay a dividend for the foreseeable future, but will use its cash flow and retained earnings to expand its business. While that might be great for management it is not so good for shareholders. However, a positive development for shareholders is the publication on its website of a table of analysts' forecasts and their recommendations. For what they are worth the average forecast for profit before tax is £108m and 8.9p of earnings per share. Perhaps not surprisingly most of the recommendations in such a public display are positive: two Buys, four Holds and only one Weak Sell.
Trying to assess the relative merits of each company is very difficult. IP does seem to be the racier of the two, with zero dividend policy and change of year-end to December. This may well be justified. Although we take electric power for granted in this country it is still a rapidly growing business in most of the developing world. While it's biggest area of expansion is the US it might seem odd to argue for a high growth rating on this stock. Although it was once a developing country, it hardly is now. But the deregulation of the US power industry does provide some one-off opportunities that could be attractive.
That's basically all there is at the moment on these two companies. If you want their web sites they are here for Innogy and here for International Power. And if you want to know how to adjust your portfolio to cope with the change there is an excellent post by TMF Venturian to tell you how.