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Utility wind players consolidate -- RWE bids for rival Essent

Germany's second largest energy group, RWE, has announced plans to acquire top Dutch energy company Essent, gaining both conventional generation capacity and clean energy assets to push it towards its renewables goal of 4.5 GW by 2012. RWE and Essent are "joining forces in the renewables sector," says RWE's Jürgen Grossmann. The company's clean power generating capacity target for 2020 is 10 GW.

RWE says its binding cash offer of EUR 9.3 billion, including debt, is fully supported by Essent's executive and supervisory board, which has advised shareholders to accept. At the end of 2008, Essent had 435 MW of onshore wind capacity, 365 MW in Germany and 70 MW in the Netherlands, including the Grebin and Schmarloh wind stations in Germany, which came on line last year at 8 MW each.

Essent expects to complete commissioning of the 156 MW WesterEems wind station near Groningen, in the Netherlands, in the first quarter of 2009. The 52 Enercon 3 MW turbines replace the former Eemshaven and Eemsmond wind farm consisting of 134 turbines with a combined capacity of 44 MW.

In offshore wind, Essent is running a Europe-wide tender for construction and operation of its Nord-Ost station in the German North Sea. This will initially use 80 turbines with a combined capacity of about 400 MW and be sited 35 kilometres north of Helgoland. Construction is slated to begin around 2011. Another 170 turbines may be installed later.

Portugal, France and Spain

If Essent shareholders accept RWE's offer, the Dutch company's wind project portfolio will supplement RWE's, which amounts to around 830 MW onshore and about 4110 MW offshore.

RWE's renewables unit, RWE Innogy, operates 51 MW of onshore wind capacity in Germany, of which 33 MW is owned in full and the remainder in part, according to October figures. The utility operates but does not fully own 731 MW of wind plant on land in the UK, Portugal, France and Spain. Of that, 401 MW is in the UK. It also owns a share in a 47 MW plant in the Spanish province of Castile-Léon through its stake in a local wind farm operator.

Offshore, the firm has stakes in about 2110 MW under development, including a former Enova Group project in the German North Sea, half the Greater Gabbard off the English east coast, and installed or planned capacity off the Welsh coast. Off the Netherlands it is applying to install 2 GW at two locations.

RWE's acquisition of Essent means the disappearance of a relatively small competitor from RWE's home turf and further consolidation in the European energy market toward a handful of large companies. RWE employs 63,400 people, supplies 20 million customers with electricity, 10 million with gas and recorded EUR 42.5 billion in revenue in 2007. Essent, with 7800 staff and EUR 6.6 billion revenue in 2008, supplies around 2.3 million customers with electricity and around 3 million with gas.

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