Enel Green Power has executed a large renewable energy asset sale in Portugal, as it looks to increase investment in developing markets.
Enel Green Power sold renewable energy assets to First State Wind Energy Investment for €900 million ($1 billion). The renewable energy generator will net around €30 million from the sale, which it says will help reduce its €550 million debt.
Enel Green Power has been looking to expand into developing renewable energy markets such as Africa, South America, and Asia, where governments are still offering high feed-in tariffs. The company is therefore looking to invest in markets with a higher returns on investment.
Economic conditions in developing countries remain much better than they are in Europe. Developing countries have announced ambitious capacity addition targets in the renewable energy sector and are offering high feed-in tariffs to achieve them. European countries, on the other hand, have reduced feed-in tariffs and are levying new taxes on renewable energy projects.
Entry Into Developing Markets
Enel Green Power recently and substantially expanded its presence in developing markets, acquiring companies, securing rights to develop projects, and commissioning power plants in several countries including India, South Africa, Mexico, and Brazil.
Enel Green Power acquired a majority stake in BLP Energy, for approximately €30 million. BLP Energy has significant wind energy assets in India, and Enel Green Power may invest additional funds to boost capacity addition.
In July, the company announced investment of $220 million in a 100 MW wind energy project in Mexico which would increase the company’s presence in the Mexican renewable energy market to around 400 MW.
In Brazil, the company secured rights to develop 553 MW worth of solar power capacity in a recent auction, and Enel Green Power is set to sell the power generated from the projects at around US$0.0842/kWh.
In South Africa, the company is among the most successful developers in the auctions under the Renewable Energy Independent Power Producers Program (REIPPPP).
Earlier this year, the company has announced that it plans to invest $9.9 billion over the next 5 years, focusing mostly on enhancing generation capacity. The company hopes to add 7.1 GW of new capacity before the end of this decade. A bulk of this capital investment and capacity expansion will take place in the emerging markets of Chile, Mexico, and Brazil.
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