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Italy

Italy

Plans scaled back as finance gets tight -- Erg cuts capacity forecast

Italian renewable energy group Erg Renew has downgraded its forecasts for wind development in Italy and France to 2012. The global economic downturn has forced the group to postpone a EUR 200 million capital increase initially slated for 2008 and sharply reduce planned investments, it says.

Last year the group said it would spend EUR 863 million in 2008-2011 on wind development (Windpower Monthly, June 2008). Now it says it will invest just EUR 244 million through 2012 on Italian wind projects and EUR 45 million in France. It expects to have 284 MW installed in Italy and 84 MW in France by end 2012, a deal less than the targets it set out for those countries a year ago of 584 MW and 115 MW by 2011, respectively.

Erg Renew currently has 144 MW of installed wind capacity in Italy and preliminary construction work has begun on the wind capacity additions planned by 2012 -- the 100 MW Fossa del Lupo development in the region of Calabria and the 40 MW Ginestra wind farm in Campania. In France, construction has begun on Erg Renew's 9.2 MW Plogastel wind farm and a permit has been secured to build a 20 MW facility in Greneville.

While revenues from Erg Renew's wind activities in 2008 were EUR 34.9 million, up from EUR 31 million in 2007, it posted a net loss of EUR 24.4 million in 2008 compared with a net profit of EUR 2.3 million in 2007. Its Italian wind business saw revenues dip to EUR 25.2 million from EUR 30 million in 2007 as output was curtailed to enable grid operator Terna to complete work on the Apulia transmission line. Erg was also ordered by the energy regulator to refund EUR 2.4 million, a one-off reimbursement related to electricity sold in 2007.

Earnings before interest, tax, depreciation and amortisation (EBITDA) from its Italian wind business were also affected by write downs on wind plants no longer included in the group's business plan and fell 41.5% to EUR 13.3 million. EBITDA for Erg's overall wind activities slipped a more measured 13% to EUR 21.1 million, thanks to a jump in revenues from its French wind farms, which increased to EUR 9.7 million from EUR 2 million in 2007.

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