Poland utilities scramble to beat wind power subsidy reforms
Two Polish utilities have signed an agreement to buy 75% of shares in the Polish arm of Spanish utility Iberdrola Renovables Energia, it emerged on Tuesday.
The move extended a spike in the interest shown by state-owned utilities PGE and Energa Hydro in domestic wind energy acquisitions, as the firms battle to beat a looming cut in subsidies for onshore wind projects coupled with regulatory uncertainty under a new energy law.
Under the latest deal for Iberdrola Renewables Polska, PGE is expected to acquire three onshore wind farms with a capacity of 70.5MW with agreements in place for the offtake of electricity and green certificates, as well as a portfolio of pipeline wind projects.
Energa will take over wind farms with an installed capacity of 114MW, as well as a portfolio of wind projects in development.
The deal followed swiftly in the footsteps of PGE and Energa's move to acquire wind farms in Poland with combined capacity of 555MW from Denmark's DONG Energy (see EDEM 19 February 2013).
The interest in acquiring new wind farms comes in light of plans announced by Polish ministers to reform support for renewable technologies.
Under the energy bill, support for biomass and onshore wind will be cut in favour of offshore wind and solar power. Green energy looks set to be indexed and sold at a fixed price (see EDEM 6 February 2013).
Support for some renewable forms of power generation including hydro and biomass co-firing will be nullified or limited.
Analysts said the utilities' move made sense as they look to diversify the generation mix in their respective portfolios.
"PGE is investing in the wind farms to mitigate risk and I think it should keep doing that before the new renewable law comes into force, Pawel Puchalski, head of equity research at BZ WBK in Poland, told ICIS. "Otherwise the company could wake up facing quite a serious problem.
"Also, it will be good for the image of PGE, because as it stands, it is one of the dirtiest companies in Europe," Puchalski added.
Tomasz Krukowski, Poland-based research director at Deutsche Bank Securities, pointed out the cost-effectivness of acquiring new wind farms. "It is easier to buy them than build them from scratch," he said.
Race against cuts
According to a report into eastern European wind power published earlier this month by the European Wind Energy Association, investors in Polish wind "made an effort to complete projects during 2012 in order to benefit from the [then-]current framework and they postponed future investments".
The report pointed out that a reduction in the number of years for which wind farms are eligible for green certificates was still being considered under the looming law - hence the rush to acquire installed capacity before the legislation passes.
The latest transaction is expected to be complete within months, subject to obtaining competition approval. The assets are being sold for about zlotych (Zl) 840m (€202m).
The remaining 25% of Iberdrola Renewables Polska is owned by the European Bank for Reconstruction and Development.
And according to a statement released by Energa, both Polish state-owned utilities are interested in securing the remaining stake. Karolina Zagrodna
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