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Italy

Italy

Spanish grip on Italian market -- Players jostle for space

The Spaniards are betting on strong growth prospects in the Italian wind business, with Spanish utilities Endesa and Iberdrola, wind firm Corporación Eólica SA (CESA) and turbine manufacturer Ecotècnia all unveiling ventures in the Italian market.

ERG CESA Eólica -- a 50-50 wind energy joint venture set up last year between Italian energy group ERG and CESA -- announced its first Italian investments last month. It is buying a 31 MW wind farm in Cocullo in the region of Abruzzo from Gamesa, yet another Spanish player active in Italy, and will begin construction in early 2006 on a 120 MW wind farm in Calabria, a project expected to be operational in early 2007. The combined investment in the two projects is EUR 160 million and will see ERG CESA Eólica go halfway to its target of installing 300 MW of wind capacity in Italy. The expected turbine supplier is Gamesa, but ERG CESA Eólica says it will not make its final choice until next month.

Endesa, in the midst of a hostile bid from Spanish Gas Natural, is plodding ahead with its wind plans for Italy aimed at putting 425 MW in operation by the end of 2009. In October, Endesa Italia began construction on two wind farms with a combined capacity of 56 MW in Trapani and Vizzini on the island of Sicily. Endesa Italia will invest about EUR 66 million in the facilities, which are expected to be operational by the summer.

Acquisition

That announcement was followed by Endesa Italia's acquisition of a 51% stake in wind energy group MF Power from Italy's Merloni Group. MF Power is the owner of three projects in various stages of development in the region of Campania with a combined capacity of 60 MW. Last month a 15 MW MF Power plant in Vallesaccarda was about to be hooked up to the network while a second 9 MW plant in the same location was forecast to begin operations in early 2006. Both use GE 1.5 MW turbines. A 36 MW plant in Scampitella must still receive regulatory authorisation and a technology supplier has yet to be selected.

Endesa Italia currently has just a single 20 MW wind plant operating in Sardinia. Aside from the latest projects, much of the company's future wind development in Italia is based on an agreement with Gamesa Energía that would see it acquire an additional 200 MW Gamesa is developing in Italy over the next three years.

Other market players, however, might collect the efforts of Endesa's Italian wind efforts. According to the Italian and Spanish press, Iberdrola -- Spain's second largest utility -- is set to grab Endesa's wind assets if Gas Natural is successful in its takeover bid. Gas Natural has said it plans to sell off certain Italian assets to Iberdrola, but has not specified which are on the block.

Strategic investment

ASM Brescia, the northern Italian utility that owns 20% of Endesa Italia, says it is prepared to take steps to defend the value of what it considers to be a strategic investment. Financial analysts say that ASM Brescia could join up with other investors to buy out the remaining 80% of Endesa Italia, although another possibility is a partnership with Iberdrola.

With or without Endesa's Italian assets, Iberdrola has clearly set its eyes on the Italian wind business. In October, the Spanish utility agreed to acquire 100 MW in Italian wind park development rights from Gamesa, in which Iberdrola is also the leading shareholder. When added to a previous agreement with German firm P&T Technology, Iberdrola currently has 300 MW of Italian wind generating power under development.

Meantime, Barcelona-based turbine manufacturer Ecotècnia cites both the strong prospects for Italy's wind market, with 1265 MW in cumulative capacity installed at end-2004, and the country's geographical proximity as reasons for opening up a commercial office in Rome in October. Ecotècnia says the announcement of its first Italian turbine contract is at hand, but it is also is looking to develop Italian wind farms.

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