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More sparks fly in Spanish industry -- Gamesa sheds its load

Spanish wind giant Gamesa has announced its strategy to auction off 1000 MW of operating wind plant and projects from Gamesa Energía over the next five years. Over my dead body, says utility Iberdrola, Gamesa's joint-leading shareholder, sparking off what could be yet another face-off with one of its wind affiliates. Iberdrola entered its first confrontation in January after negotiations to create a worldwide renewables joint venture with Spain's Energía Hidroeléctrica de Navarra (EHN) crumbled. Iberdrola had refused to concede veto powers to the Navarra government, a co-shareholder in EHN.

Behind the new bout of trouble is an assumption by Iberdrola that it had first refusal on the imminent sale of a mere 142 MW of Gamesa Energía's on-line wind capacity. The utility owns 50% of special investment group IBV, which controls 37.78% of the Gamesa corporation and clearly felt it had insider privileges. Now the humiliated utility says Gamesa's call for bids is illegal, alleging it does not have the consent of the board. What's more, Iberdrola has used the same argument to attack Gamesa's plans to develop an initial 1000 MW in the US with its new American partner, Navitas (Windpower Monthly, June 2002).

Gamesa, meanwhile, says it is already receiving offers for its wind portfolio. Among the contenders so far is Italian utility Enel, together with Sinae -- the renewables wing of Spain's fourth largest utility, Hirdocántabrico -- and developer Alabe, member of the Madrid-based Acciona construction group. Gamesa plans to close the shortlist at three main contenders and says it will consider a certain degree of piecemeal divestment. Around half the sale reportedly involves plant already up or building in Spain, with the remainder made up of advanced projects for home and abroad, mainly in Italy and Portugal.

Covering debts

Gamesa is looking for cash to cover its debts. Last year it paid EUR 875 million for the 49% of its wind turbine making division, Gamesa Eólica, it did not already own. Vestas, with 40%, held the largest block and the deal marked the beginning of the end of the Vestas-Gamesa technology transfer operating since 1994.

The purchase was part of Gamesa Eólica's plans for world turbine market supremacy. Initially this did not threaten Iberdrola's own EUR 2500 million investment plan for international wind development, the presumption being it would use Gamesa Eólica turbines. But it has fast become clear that Gamesa Eólica's expansion plans at home and abroad rest mainly on supplies to projects developed by Gamesa Energía, at least in the short term. Even this would not be so bad if Gamesa were prepared to sell completed projects to Iberdrola, but it is not, preferring to opt for investors it thinks will pay more. As a result, Gamesa Energía has become one of Iberdrola's main competitors internationally, especially in the US, Italy, Greece, France, Australia and Latin America.

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