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Gas Natural acquisition underwhelming

SPAIN: A closer look at Spanish utility Gas Natural's €260 million acquisition of 201MW of online domestic wind assets last week contradicts local press claims of a market revival in Spain.

Gas Natural CEO Rafael Villaseca
Gas Natural CEO Rafael Villaseca

The deal, subject to anti-trust approval, will hand Gas Natural 100% control of developer Gecalsa, a conglomeration of banks Santander, La Caixa and Caja Rural.

The agreement — which also includes 500kW of online PV — translates to a price of €1.3 million/MW if only online assets are factored in. Prices like this have not been seen since Spain's energy reform began in 2012.

The package also includes a 400MW development portfolio. Gas Natural declined to comment on its intent to further develop that new capacity.

In fact, the company's last official words on this came from CEO Rafael Villaseca in February when he announced "conditions are nowhere near good enough" to develop new projects. That month, the Spanish utility abandoned all wind construction plans in Spain, despite being the only company to defy government cuts to renewables subsidies by subsequently bringing a project online.

The government regulation, passed a year ago, ended power price support for renewables, setting two options instead.

New wind capacity can trade direct on the electricity pool market with no support. Alternatively, a developer can open projects to a subsidy auction. The subsidy is initially set at 7.5% of a plant's estimated pre-tax turnover. So far, however, no developer has opted for this mechanism.

The Gas Natural deal "is simply the banks continuing to shed renewable energy assets", said one sector consultant at Spain's national wind congress last week, preferring to remain anonymous.

Following the reform, "the only existing online [wind] capacity bringing decent profits now is capacity commissioned in 2008 onwards, which is mainly what Gas Natural has acquired", he added.

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