In today’s news we will look into the construction division of Lendlease which is currently up for sale. In the meantime, Centrica commenced building of a hydrogen-ready power plant in the United Kingdom. A new managing director has been appointed by Akela Construction, on the other hand. For additional information, building has begun on the 102MW Stranoch wind farm. In addition to this, Strabag UK has experienced a significant loss in trading.
Lendlease Starts Selling Construction
Original Source: Lendlease puts construction arm up for sale
Lendlease is leaving the UK and selling its construction business to focus on Australia.
The company hopes to sell its UK construction branch within 18 months and is well progressed on selling its US construction arm.
Lendlease will sell over a dozen London, Birmingham, and Manchester development projects.
The ambitious plan to simplify and restructure Lendlease’s worldwide development and construction division follows a disastrous four years that saw its stock collapse by half.
Lendlease CEO Tony Lombardo said the sale of international construction and early release of global property assets would generate A$4.5bn (£2.3bn).
Sale of international construction will affect 1,400 workers, while property asset departure should raise A$2.8bn.
Lombardo said: “Over the next 18 months, we will divest the international construction operation to focus on our most profitable home market, Australia.
Through the life science JV, we’ve mostly left Asian construction. We are well underway in divesting our US construction company.
“In the UK, we are preparing the business for sale in an improving market with a strong backlog and preferred work book of over A$5bn (£2.6bn).
Finally, we have released A$2.4bn (£1.25bn) of capital from our foreign development projects, somewhat offset by expected spending of A$700m (£365m) for engineering and UK building remediation work, resulting in a net capital release of A$1.7bn (£900m).
“This acceleration will target three areas. Land and inventory on the balance sheet will be sold first.
Second, for our land management agreements, we are the master developer and will work with our partners to generate value and accelerate capital flow through land sales or new partners.
Third, on eight projects we started as capital partners, we will finish and divest.”
Lendlease created a Capital Release Unit to speed capital recycling and divest overseas construction to maximize embedded value.
This will be overseen by Lombardo and include under-construction sites like Stratford in East London.
Lendlease said the sell-off strategy would result in £260m in non-cash goodwill write downs for the US and UK construction businesses from the 1999 Bovis acquisition.
The year to June 2023 results for Lendlease Europe, which primarily serves the UK, showed construction revenue falling 17% to £380m and EBITDA rising from £2m to £5.6m.
Pre-tax losses were £124m owing to building safety writedowns. About two-thirds of the 1,200 employees work in construction.
According to one city expert, Lendlease Construction in the UK resembles an in-house development contractor. It raises the question of who would buy the business now.
“Lendlease say they can find a buyer, but at what price without the development pipeline.”
Centrica builds UK Hydrogen-Ready Power Plant
Original Source: Centrica starts construction of UK hydrogen-ready power plant
Centrica is building a hydrogen-ready gas peaking power station in Lincolnshire, UK.
The company said it is installing four Wärtsilä gas engines in the decommissioned Brigg output Station turbine hall to produce roughly 100 MW of peak output.
The British company will start testing later this year to blend hydrogen into the gas from 3% to 20% before aiming for 100% hydrogen and using comparable tech at all peaking facilities.
Brigg Energy Park construction is estimated to take nine months, with full operations in early 2025.
H2 View understands that Wärtsilä’s 31SG gas engines can power 20,000 houses for a day once the peaking plant is operational and connected to the grid.
Centrica Group Chief Executive Chris O’Shea said gas will be crucial to the UK’s electricity supply when renewable energy is low.
Wärtsilä Energy Vice-President Africa & Europe Kenneth Engblom said, “This installation will help enable clean renewable energy by providing grid balancing.
Wärtsilä 31 engines are known for their efficiency and hydrogen blend readiness.
In 2022, the Finnish company reported success from a hydrogen blending demonstration at a US power plant, where its unmodified 18MW 50SG engine supplied grid power.
The New Managing Director has Been Appointed by Akela Construction
Original Source: Akela Construction appoints new managing director
Robert Ogg has been named managing director of Akela Construction, a firm based in Glasgow.
Robert Ogg brings over 30 years of expertise in civil engineering and construction to Akela.
Before this, he oversaw frameworks and projects for Balfour Beatty and was managing director of infrastructure works in Scotland for Morgan Sindall. He most recently served for five years as Robertson Group’s director of national frameworks in the United Kingdom.
He is expected to find new prospects for Akela in the renewable energy, civil engineering, and transportation sectors by using his understanding of framework processes and procurement channels. He was a key figure in the development of the Scotland civil engineering framework and had earlier served as head of the BAA Scottish airports framework.
According to Robert Ogg, it is an exciting time to join the team at Akela Construction because the company has become a trusted partner for civil engineering and groundworks solutions. I will guarantee that projects are completed to the greatest standards of quality and efficiency for our clients, keeping in mind that self-delivery is at the forefront of all that Akela does.
“I am excited about building upon the existing strong client relationships and establishing new ones to enhance our pipeline and bring the business’s vision to fruition.”
Mark Markey, managing director of Akela Group, expressed his belief that Robert’s wealth of knowledge will greatly contribute to the expansion of their business. He will be instrumental in expanding our group’s approach into new and developing sectors and in strengthening our ties with current clients in the housing sector.
The 102 MW Stranoch Wind Farm has Commenced Construction
Original Source: Construction begins on 102MW Stranoch wind farm
The Dumfries and Galloway wind farm Stranoch, which is being built by EDF Renewables, has commenced.
We anticipate that the 20-turbine site will be operational by the end of 2026. The farm’s capacity will be 102 MW when it’s finished.
The new site has a power purchase agreement (PPA) that major grocery chain Tesco has signed. Tesco intends to buy enough power to operate 80 average-sized supermarkets annually. Additionally, the site will supply approximately 40% of BAE Systems’ current energy needs in the UK, as the defense giant has also signed a PPA.
“The chief executive of EDF Renewables UK, Matthieu Hue, expressed his company’s delight at reaching this significant milestone on Stranoch at a time when addressing climate change and energy security are top priorities for everyone.
Tesco and BAE Systems are teaming together for the first time on a project in Scotland, and we couldn’t be happier about it. The goal of the initiative is to assist Tesco decarbonize its retail portfolio.
It is a point of great pride for us to collaborate closely with locals throughout the entire process so that communities may reap the full benefits of renewable energy projects. We will maintain our consistent communication with the local community and people as the construction project moves forward. The local community and all those who have helped with the initiative up to this point have my sincere gratitude.
Rise in PPAs
In response to mounting calls for them to decarbonize, a growing number of large companies have signed PPAs with wind farms in the United Kingdom.
Amazon is now one of the biggest solar and wind energy purchasers in the world, having just inked a deal with Iberdrola to offtake 159 MW of energy from the 1.4GW East Anglia 3 offshore wind farm. As previously announced in January, Amazon will now get 473 MW of power from Ocean Wind’s Moray West offshore wind farm as part of a revised power purchase agreement.
In Ireland, Almac Group and asset management NTR entered into a corporate power purchase agreement (CPPA) in February to use the 21.6 MW Murley Wind Farm to power 95% of Almac’s Craigavon campus headquarters.
Tragic Business Loss for Strabag UK Continues
Original Source: Strabag UK suffers further big trading loss
As it prepared for a long-term presence in the UK, the Austrian construction company Strabag’s UK business continued to suffer a third year of losses.
Despite having worked on HS2 in the UK since winning contracts in 2017, the contractor established Strabag UK in 2020 to serve as its primary operating business in this country.
After losing £22 million in 2022 and £2 million the year before, Strabag UK recorded operating losses of £17 million last year.
With the start of full production at its Hartlepool concrete section factory in 2023, revenue nearly quadrupled to £135 million.
After hiring key personnel from the defunct Buckingham Group, Strabag UK’s joint managing director Andrew Dixon predicted that the company would suffer large costs as it attempted to establish a presence in the construction sector.
According to him, they expanded their capabilities in the UK to include designing and building infrastructure projects and producing concrete products. In the third quarter of 2023, they hired a full team from the defunct Buckingham Group and supplemented it with current Strabag employees, allowing them to join the UK building sector.
We anticipate that this new business unit will start bidding on construction contracts in early 2024 and will start delivering purchased projects in the same year.
“Since we are a new player in the market, our focus in 2024 and 2025 will be on winning over clients, not delivering on our secured backlog,” he continued.
Because the margins this investment will eventually provide represent a considerable return on investment lag, the cost of bidding in 2023 and for the next two years or more will be greater than for a mature business. This is because of the disproportionate gearing.
“The high barrier to entry in the infrastructure industry makes this inevitable.”
Strabag has been operating in the UK since 2011, but it wasn’t until 2017 when it secured the primary works civils on HS2 with joint venture partners Skanska and Costain that the company really started to make an impact.
The 48 km of tunnels, which include the Northolt Tunnels and the Euston Tunnels and Approaches, are being planned and built by this joint venture.
Almost immediately after, in 2018, Strabag signed a massive tunneling contract with Anglo American to supply 37 kilometers of ore transfer tunnels and other infrastructure for their North Yorkshire potash mine.
Strabag UK’s payroll jumped from 824 in 2022 to 1,400 in the previous year, marking the beginning of a dramatic increase.
Summary of today’s construction news
Overall, we discussed about the Lendlease which after selling its building business in the UK, Lendlease is shifting its focus to Australia. Within the next 18 months, the firm intends to sell its UK construction unit, and the sale of its US construction arm is making good progress. Twelve of Lendlease’s development projects in Birmingham, Manchester, and London will be sold. A gas peaking power station that is ready to use hydrogen is being constructed in Lincolnshire, UK, by Centrica. In order to generate around 100 MW of peak output, the business is putting four gas engines from Wärtsilä in the turbine hall of the decommissioned Brigg output Station. Meanwhile, Glasgow-based Akela Construction has appointed Robert Ogg as managing director. Robert Ogg has been a specialist in civil engineering and building for almost 30 years, and he brings that knowledge to Akela. Additionally, EDF Renewables’ construction of the Stranoch wind farm in Dumfries and Galloway has begun. We expect the 20-turbine location to be fully operational by the year 2026’s end. Upon completion, the farm will have a capacity of 102 MW. Additionally, Austrian construction firm Strabag’s UK operations continued to incur losses for a third consecutive year as the company made preparations for a long-term presence in the UK. The contractor set up Strabag UK in 2020 to operate primarily in the UK, even though it has been working on HS2 here since receiving contracts in 2017.
