The German energy company E.ON has agreed the sale of its eco-energy businesses in Spain and Portugal to the Australian investment firm Macquarie European Infrastructure Fund #4 and Wren House (the investment vehicle of Kuwait's sovereign wealth fund for infrastructure) for €2.5 billion, well below the €3 billion asking price.
The German group said in a statement that it had found "a new strong owner for its activities, with extensive experience in the energy sector."
The activities in Portugal and Spain that will be handed over to the Australian fund include 650,000 electricity and gas customers; 32,000 kilometres of electrical distribution network; and an installed capacity for generating four gigawatts from coal, gas and renewables.
The transaction is subject to approval by the EU competition authority and is expected to be rubber stamped early in 2015.
The CEO of E.ON, Johannes Teyssen, explained that "the proceeds from the sale will increase the financial flexibility and strengthen the balance sheet of E.ON."
The real reason for E.ON pulling out of the Iberian wind energy business will have been strategic as with falling taxpayer support for green energy units there are more attractive opportunities elsewhere.
In 2007 E.ON acquired the wind farm operator Energi E2 Renovables Ibéricas from the Danish utility Dong Energy for €722 million and in 2010 commissioned the Barão São João wind farm in the western Algarve.
Also in 2007, E.ON’s then Chief Executive Wulf H. Bernotat said, "Wind power will play an important role in our future energy mix. It is CO2-neutral and can be used economically with the aid of modern, efficient plants at wind-exposed sites."
Something has changed in the Iberian renewables market for such a large player to decide to invest elsewhere. Equally, the Kuwaiti and Australian funds are no amateurs and now that the capcity has been installed they will be looking at increasing and long term revenues in an industry where prices seem always to go up, not down.
Macquarie's stated aims for its #4 Fund include "Essential services to the community, Strategic competitive advantage and Sustainable and predictable cashflows over the long-term."
There must still be money in wind power despite its high unit cost of production.
