A clearly defined strategy

Nuon's purchase of 620 MW of wind projects under development in Spain (main story) will make a sizeable contribution to the Dutch utility's aim of securing 3000 MW installed renewables capacity by 2005. At present the company has 180 MW wind capacity spread over the Netherlands, Germany, India and China, with a further 180 MW under construction. The Spanish shopping trip brings the total to around 1100 MW.

Nor is this likely to be the last significant purchase says Dirk Kooman, of Nuon International. "We have a very clearly defined strategy on how to approach the international market. This is a major step forward but it fits 100% with that strategy. Basically we have five criteria with which we evaluate potential wind energy markets.

Ten markets defined

"There must be supportive legal structures; there must be attractive financial incentives or tax incentives; it must be possible to build an attractive portfolio of at least 200 MW in a couple of years; there absolutely has to be non-recourse financing -- that is projects must be able to be financed without recourse to the sponsor so that we only risk our equity; and finally, the grid connection has to be legally secured," he explains.

"If you take that set of criteria and put it on the globe, it eliminates some 220 of the 235 countries in the world, and we are left with fifteen to seventeen possibles. If you then use a financial and political risk filter, you are left with around ten countries. They are, Germany, Spain, India, China, Brazil, France the UK, and probably surprisingly, Norway, the US and, because of some special Dutch regulations, Poland." Kooman is referring to the economic stimulus for investing in Poland provided by Dutch carbon trading rules.

"For our purposes Denmark, for example, is too over-developed and the effort we would have to put in to developing that market could be better spent elsewhere. In the first instance we are looking to markets which are internally self-supporting. In Spain we will be selling power on the domestic market using all the available mechanisms -- the fixed tariff and the pool price plus top up. Trading environmental benefits across borders in the form of certificates is a secondary concern and we will know more about how that will work in a year or so."

Kooman says Nuon International is working closely with the mother company's head of renewables, Annemarie Goedmakers, and with the team behind the Renewable Energy Certificate System (RECS) -- a fledgling European-wide system for trading renewables power across borders by using green credits -- to optimise use and trade of RECS. "But I will always take the position that our wind farms have to be profitable inherently," he adds.

"For the time being DESA will be our base for expanding into the Spanish market, but that doesn't mean that we will exclude other opportunities and we may even enter into partnership with other companies."

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