France's largest independent electricity and gas supplier, Poweo, has been forced to sell its generation assets, including several wind power plants, to plug a growing deficit.
Austrian utility Verbund, which already owned 40% of Poweo Production, has agreed to pay EUR120 million for the remaining 60% stake. What happens next is open to question.
The deal brings Verbund 930MW, either operating or under construction, in France. This comprises 825MW of thermal capacity and 105MW of renewables, of which 97MW is wind energy. The portfolio also includes 700MW of wind power projects under development, including two offshore projects totalling 400MW. Verbund also gains Poweo's wind development team, Espace Eolien Developpement, which the company acquired in 2007.
Poweo hopes the sale will only be temporary. It retains an option to buy back the 60% share at the same price plus interest until the end of June 2013. Even before the sale, however, Poweo had mandated Credit Suisse bank to sell the renewables operation, Poweo Renewables, which is part of Poweo Production. Verbund reports that several companies have expressed an interest.
The most valuable part of Poweo Renewables could be its offshore activities. The company's two projects lie in zones selected by the French government for the forthcoming tender. In addition, Poweo Renewables has joined a consortium with French turbine manufacturer Alstom and EDF Energies Renouvelables, the renewables arm of state utility EDF, intending to bid for four of the five selected zones.
Poweo's financial challenge stems from delays in deregulating the electricity market in France, specifically allowing alternative suppliers regulated access to EDF's nuclear power. The necessary law was passed in November, but the government has still not announced the tariff. A decree is expected before July. Poweo and other suppliers are hoping for a price close to EUR35/MWh, while EDF seeks EUR42/MWh.
Meanwhile, Poweo says it has sufficient cash from the Verbund deal to keep it going for at least another year.
Verbund's main focus has been hydropower, although it has expanded into the wind sector in recent years. The company owns 65MW of operating wind capacity in Austria and Bulgaria and has around 200MW under development in Romania. Its joint ventures in Italy (Sorgenia) and Turkey (Enerjisa) also operate wind plants.