Analysis: Infrastructure investors look to Italy

ITALY: Infrastructure investment companies are eyeing Italian wind energy opportunities, with several high-profile deals on the horizon, as operating wind farms are seen as offering steady and satisfactory returns.

Investments have also been facilitated by the fact that more aggressive investors are exiting the market following the introduction of a capacity cap and incentive cuts that have dimmed future development prospects.

Australian infrastructure investor Macquarie is in exclusive talks to acquire a portfolio of wind farms from Italian energy group Sorgenia, composed of 112MW of Italian projects, as well as Sorgenia's 81MW share of French wind farms owned through a joint venture with private equity firm KKR. According to a source, the transaction could take place at a price of up to EUR 250 million.

French power group EDF is also close to selling a 70% stake in a portfolio of 600MW in Italian wind farms to Italian infrastructure investor F2i, according to another source. This covers around 500MW in wind capacity owned by its Italian subsidiary Edison and a further 100MW owned directly by EDF Energies Nouvelles. That deal is expected to be worth just under EUR 500 million.

F2i already owns a 15.7% stake in Italian wind operator Alerion Clean Power, making it the largest single investor in the company, which has 241MW of operational wind farms in the country. F2i is also a partner in Italian solar photovoltaic venture HFV. The acquisition of the Edison portfolio is expected to offer it greater economies of scale and risk diversification in its Italian renewable portfolio.

More capacity for sale

German power producer E.on has also reportedly given the go-ahead to a sale of its 6GW in generation capacity in Italy, although a spokeswoman for E.on Italia said that it is premature to talk about a disposal of Italian assets as an in-depth analysis of the portfolio is continuing. E.on's Italian renewable energy capacity includes 328MW in wind farms, along with 50MW in solar and 531MW of hydroelectric capacity.

Analysts expect that it is likely E.on will sell the portfolio in pieces, partially because the reported EUR 3 billion figure for the entire portfolio looks expensive for most potential buyers, even more so given that Italian power demand remains depressed. When it comes to E.on's renewable assets, infrastructure funds are expected to take a look, but analysts see industry players as the keenest.

Erg Renew, which became Italy's largest wind operator with the acquisition of 550MW of Italian wind farms from GDF Suez last year, has no comment on reports that it could be eyeing E.ON's green energy business in Italy. It has said it is focusing on growth abroad but hasn't ruled out further expansion in Italy. Edison has also not commented on reports that it is eyeing some of E.on's Italian activities, renewable and otherwise.

Alongside these assets, a number of smaller portfolios are also for sale. The healthy offering of wind farms on the market, and the increasingly difficult financial position of some investors seeking an exit, means that asking prices have come down, notes Giuseppe Mastropieri, managing partner of renewable energy advisory consultancy REA.

However, Mastropieri notes that consolidation in Italy's still extremely fragmented wind sector has proceeded more slowly than some had predicted. One reason is that some portfolios on the market are simply too small to be attractive as an investment for the growing number of infrastructure funds assessing opportunities.

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Sign up now
Already registered?
Sign in