E.ON going big with wind

E.ON's (NYSE: EON) acquisition yesterday of an Iberian wind farm operator marks the German energy giant's first move under its new renewable energy strategy.

"We think that we have to do something about climate change and intensify our renewables business," E.ON spokesman Jens Schreiber told the Cleantech Group.

The company plans to invest $4.1 billion in renewable energy by 2010, and will create a new renewables unit to oversee its green energy operations.

"Wind is very much in our focus, because under the regulatory schemes that we have in Europe, it is economically interesting," said Schreiber.

Grabbing Energi E2 Renovables Ibéricas from Danish utility Dong Energy for $996.7 million moves E.ON closer to its goal of 2,600 megawatts of total wind power.

The purchase price includes $353.4 million in assumed debt.

With yesterday's deal, E.ON now has more than 700 MW of wind in operation and another 1,500 MW under development.

Companies in the U.S. have also been busy ramping up their wind power activities, each one claiming to have a bigger wind farm than the last guy (see Wind power going strong down south).

Energi E2 generates 260 MW of electricity in Spain and Portugal, with wind farms accounting for most of that capacity.

The company has another 560 MW of wind power under development on the Iberian peninsula, set for completion in the next four years.

Energi E2 also operates smaller hydropower and biomass plants.

Schreiber said there are good incentives in Europe for going green.

"If you feed renewable electricity into the grid, then the (utility) company has to pay for the electricity that you put in," he said, adding, "they are forced to pay you more than your costs."

He said the exception is in the U.K., where although they don't pay a premium for green energy, the utilities need to produce a certain percentage of their power from renewable sources.

"We have lots of good possibilities on the shorelines in Great Britain and in Spain and Portugal. In northern Europe we will probably go offshore," said Schreiber of the company's wind outlook.

No word on what's next on the acquisition menu for E.ON, but Schreiber said the company will be working on "organic growth, developing our own wind farms," as well as continuing to look for other possibilities in wind.

Together with Shell and a consortium called CORE, E.ON is already working on the London Array, which it said will be the world's first gigawatt wind farm, generating enough electricity to power 750,000 homes.

The 1,000 MW Array will be built off the south coast of England.

Schreiber said the company is also interested in biomass and biogas, as well as our old friend the Sun.

"You can use it and combine it with natural gas and use it as a heating system," he said of solar thermal.

"We have also entered into a cooperative with a large German company that uses windows to make photovoltaic cells."

Octillion in Vancouver is developing the same type of technology. The company recently spun out its MicroChannel Technologies unit, which works on optic nerve regeneration, to focus on solar (see Octillion to spin out biotech unit).

E.ON's big renewable strategy, announced in May, is part of a major reorganization of the company that includes a new renewables unit, an E.ON Energy Trading unit, covering all of its European trading operations, including power, gas, coal, oil and CO2 emission allowances, and a third new unit responsible for the construction of coal and gas fired plants.

The new renewables unit, likely to be named E.ON Renewables, will start its umbrella operations in October, headed by Frank Mastiaux, current head of the global liquefied petroleum gas business at BP.

The new unit will oversee all of E.ON's green energy operations, with the exception of hydroelectricity.

The renewables unit will also include the company's long-term carbon credit sourcing, which E.ON said will be further developed as part of a substantial expansion program.

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