More European capital into US -- Italian utility strikes

Italy's major electric utility, Enel, recently showcased its global wind ambitions and the growing influx of European capital into the US wind energy market through its acquisition of a substantial minority stake in Tradewind Energy, a Kansas, based wind developer with a 1000 MW project pipeline focused in the American Midwest. Tradewind's most mature development is the 250 MW Smoky Hills project in Kansas, with the first 100 MW phase set for completion at the end of 2007. Of the dozen other projects in various stages of development around the Midwest, Enel expects to be the lead equity investor in those it is involved in with Tradewind.

"Enel has a keen interest in growing its presence in the US wind industry," says Julie Smith-Galvin of Enel. "We recognise that, particularly at the early stage of development, a company needs local presence and knowledge to secure sites and optimise power sales prospects." For its part, the Italian company brings strong financial capabilities and the ability to buy larger wind turbine volumes than Tradewind could manage on its own as a small developer, she adds. "While I can't speak for the manufacturers, they seem to be in a situation where they can be selective and we're confident that with Enel's balance sheet, purchasing potential and status as an international utility makes us a credible buyer in the eyes of manufacturers," she says.

No sooner had the dust settled on Enel's Tradewind deal than the Italian utility announced it was buying the 63 MW Snyder Wind Project in Texas from WindKraft Nord USA. The project, to be built in Scurry using V90 3 MW machines, should be operational by the end of 2007. WindKraft will remain involved as construction manager on its first US project.

Coming at the same time as Iberdrola's American deals (page 37), Smith-Galvin agrees that Enel's purchases are part of a trend of European players grabbing more US market share and influence, but she emphasises this is not Enel's first move into the North American market. The company has a total of 67 MW of installed wind in the US, with investment in 37 MW in New York in the Fenner and Wethersfield projects and 30 MW in Minnesota. In Canada it has over 125 MW in the pipeline and Enel subsidiary NeWind is to build the first wind farm in Newfoundland and Labrador Hydro (page 36).

Europe and China

Indeed, Enel's North American wind power activity is only one side of a global plan to invest EUR 2.4 billion in renewable energy, of which EUR 1.1 billion will be abroad. This summer, the utility entered the French wind business through its acquisition of developer Erelis, with 500 MW of wind projects in its portfolio, 300 MW of those close to construction, says Maurizio Bezzeccheri, who heads Enel's renewable energy business outside of Italy. The utility's presence in Spain is through Enel Union Fenosa Renovables, which has about 330 MW of wind plant in operation, 116 MW under construction and 180 MW close to construction, says Bezzeccheri.

Enel's global expansion is not limited to established markets. In eastern Europe it has its sights on Slovakia and Bulgaria and in Romania it is developing its first project. Further away, the opportunities presented by China have not gone unnoticed. "We know on one hand that the market for wind in China is one with squeezed profitability margins, but it is such a huge market," says Bezzeccheri. "So we are identifying some partners and putting more of a focus on economics."

At home in Italy, Enel says the wind market is limited. It points to difficulties in Italy's authorisation process and stronger growth prospects elsewhere. Enel has about 300 MW in installed wind capacity in Italy, primarily on the islands of Sicily and Sardinia, with an aim of increasing that to 400 MW.

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