EGP eyes North America stake sale

An Enel Green Power wind project in Mexico.

An Enel Green Power wind project in Mexico.

Italy’s Enel Green Power (EGP) will seek to sell a minority stake in its North American renewables portfolio and dispose of its entire French wind business, the company said today.

Newly-installed CEO Francesco Venturini said the group has begun sounding out buyers for a possible minority equity stake in a package of wind, solar, hydro and geothermal capacity.

The portfolio in question would "for now" be limited to about 700MW.

Venturini told financial analysts EGP was mindful of the "phenomenon called the yieldco" which may mean it can attract a significant premium for the assets.

There is "growing market appetite" for assets with highly predictable returns and long PPAs in place, he said. "This is a window of opportunity. We don't know how long this particular market condition is going to last in the US."

EGP has 1.9GW of net installed capacity in North America, of which 1.5GW is wind.

The company said the sale would free up cash to allow it to pursue its pipeline development ambitions.

In the case of France, EGP will look to sell 100% of its interest in 178MW of operating wind capacity and 28MW more under construction. The company said it had struggled to achieve the scale of development it expected when it entered the market.

If all goes to plan the deals could be in place by the end of the year, Venturini added.

The developer said it is confident of hitting its 2014 targets despite “critical issues” in European markets that dragged on its performance in the first half of 2014.

EGP saw its operating profit (Ebitda) fall by 7.5% to €894m ($1.19bn) in the January to June period compared to the same stage in 2013. Revenue fell 1.3% to €1.41bn.

The developer said Ebitda fell by €58m in Europe, where like other renewables operators the company has seen power prices fall and suffered adverse impact from regulatory changes – not least in Spain.

Income from equity investments and  tax factors pushed EGP’s net profit up 8.9% to €293m.

The company’s capacity reached 9.15GW by the end of June, up 530MW on the same stage last year, of which 5.45GW was wind and 261MW solar.

Power generation grew 1.3TWh to 16.5TWh.

Venturini said the company will press on with its strategy of diversification – both of technology and geography – which enables EGP “to counter the challenges faced in our core European markets”.

Venturini added: “The results we have posted despite a number of critical issues in the more mature markets, which impacted performance during the period, enable us to confirm our ability to achieve the targets we have announced for the year as a whole.”

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