By NICHOLAS CONFESSORE
New York Times
September 4, 2008
ALBANY — State regulators approved a deal on Wednesday that will allow the construction of [ASSEMBLY & INSTALLATION] hundreds of new wind turbines in New York, doubling the amount of wind power capacity within a few years.
The [NEW YORK STATE] Public Service Commission voted unanimously to allow
Iberdrola S.A., a Spanish 
energy conglomerate, to acquire Energy East, a Maine-based utility with operations in five states.
Iberdrola said earlier this summer that it would invest at least $2 billion in wind turbines across upstate New York if the commission allowed it to acquire Energy East, subsidiaries of which supply electricity or natural gas to 1.7 million customers in the state.
The commission’s decision was the final hurdle for the $4.6 billion deal, which had been approved by federal and other state regulators, but spent a year under scrutiny by the commission’s staff, which recommended that it be blocked.
In approving the acquisition, the commission substantially lightened the conditions of sale that had been recommended by its staff, which had been criticized as onerous by Iberdrola and elected officials of both parties. The commission likewise moderated the recommendations made in June by an administrative law judge, who largely endorsed the staff proposal.
For example, the commission said that Iberdrola would need to provide only $275 million worth of rebates to Energy East’s current New York customers, far less than the $646 million the commission’s analysts had earlier proposed.
The commission’s staff had also opposed allowing Iberdrola to build wind turbines in the state, arguing that it would violate a longstanding commission policy to prevent the generation, transmission and distribution of power by a single company, which could leave customers and suppliers vulnerable to price manipulation.
But the commission members said they would allow Iberdrola to develop wind power as long as it obeyed restrictions devised to mitigate the risk of price manipulation.
“Developing renewable energy sources is critically important for New York,” said Garry A. Brown, the commission’s chairman. “Our decision today allows Iberdrola to fulfill its commitment to invest in renewable energy projects in New York State.”
In a statement, Gov. David A. Paterson said the commission had “struck a well-considered balance” in its proposal. “I anticipate the company will readily embrace this decision and accept its conditions, and I welcome Iberdrola to New York,” Mr. Paterson said.
But opponents of the deal, including the Independent Power Producers of New York, a trade group of utilities, said they remained worried that Iberdrola would gain too much market power under the deal.
“My concern is that there are a multitude of wind generators that want to operate in New York, so it is critical that Iberdrola respect the limitations that have been put on them, so that there is not a potential for market manipulation,” said Gavin J. Donohue, the group’s president.
Under the terms of the deal, Iberdrola would be bound to invest $200 million in wind power. But the company has promised to spend 10 times that amount, with plans for numerous wind parks spread throughout upstate New York.
New York is expected to have about 1,000 megawatts of existing capacity by the end of this year, and the plans would add about 1,000 megawatts of wind capacity to the state within a few years.
“It is a really large investment and a very significant number,” said Carol E. Murphy, executive director of the Alliance for Clean Energy New York, a trade group of environmental advocates and wind power producers, including Iberdrola. “This is a major infusion of dollars and investment into our wind industry.”
Under commission rules, the staff will release a detailed version of the proposal in coming days. It will then be up to Iberdrola to agree to the deal, if it so chooses. Elected officials, including Mr. Paterson, said they expected the company to accept it.
In a statement, the company said, “We thank the commission for its time and effort on the matter, and we look forward to reviewing the order to determine next steps.”
Last week, the commission postponed a vote on the Iberdrola acquisition after one commissioner fell ill; a second commissioner was also absent on the day of the vote and soon announced that she was resigning from the commission for personal reasons. The vote on Wednesday was 4-0.
The commission’s proposal also included a requirement that Iberdrola insulate its New York operations from any financial risks the company assumes in other states or abroad. Iberdrola would also have to divest Energy East’s fossil fuel generating plants, though it could retain the company’s hydroelectric power operations.
United States Senator Charles E. Schumer, who was among the critics of the original requirement that Iberdrola drop its wind power plans, also praised the deal.
“We have argued long and hard for Iberdrola’s ability to develop wind power, and we very much urge them to accept this ruling,” Mr. Schumer said in a statement.
http://www.democratandchronicle.com/article/20080826/NEWS01/808260336
New York PSC to rule on Iberdrola's $4.5B bid for Energy East
The future of the world's fourth-largest utility in New York state could soon be at an end, or a beginning.
Iberdrola SA of Bilbao, Spain, has bid more than $4.5 billion for Energy East Corp., the parent company of
Rochester 
Gas and Electric Corp. and New York State Electric and Gas Corp. Fourteen months after the friendly deal was unveiled, Iberdrola is due to get a thumbs up or thumbs down Wednesday from the state Public Service Commission.
At stake are $2 billion in upstate investment, New York's reputation as a place to do business and what might happen to the fourth-highest residential electricity rates in the nation.
The federal government and three other northeastern states have already approved the sale of Maine-based Energy East to Iberdrola.
In New York, the deal has been held up by some of the oldest and newest concerns in the energy sector and utility regulation. The old: The state needs to ensure that more than 1 million RG&E and NYSEG customers won't get hit with higher bills. The new: Could Iberdrola, the world's foremost wind power company, manipulate the price of electricity if it owns both wind turbines and transmission lines by making it difficult or impossible for another company to open a competing wind farm or generation plant?
The PSC staff has recommended that the five commissioners reject the deal on the grounds that it isn't in consumers' best interests.
Iberdrola has said the staff concerns are overblown and that the deal is good for New York because it will bring investment, jobs and renewable energy to a state that needs all three.
Business groups, such as the Rochester Business Alliance and Greater Rochester Enterprise, and powerful politicians, including both U.S. senators, support Iberdrola, with many fearful that PSC rejection would brand the state as anti-business.
U.S. Sen. Hillary Clinton, D-N.Y., said through a spokesman Friday that "Iberdrola's proposal ... has the potential to continue to build the state's reputation as a leader in the alternative energy industry, while making a considerable investment in bringing new jobs and other economic opportunities to upstate New York."
Gov. David Paterson hasn't taken a position, but he has heaped praise on the company for promising to spend $2 billion on wind investments within five years.
[PERHAPS, EARLY ON, GOVERNOR PATERSON SHOULD HAVE TAKEN THE ADVICE FORMER NYC MAJOR RUDY GULIANI RECENTLY GAVE TO SENATOR OBAMA. "As Mayor of New York City, I never got a chance to vote 'present'. Sarah Palin didn't have this vote 'present' as governor. And you know, when you're President of the United States, you can't just vote 'present'. It's not good enough to be 'present'. You have to make a decision."].
[MORE IMPORTANTLY, IS THIS PROMISE LIKELY TO BE ENFORCED IF THE ECONOMICS OF THE DEAL CHANGES?? FOR EXAMPLE, WHAT IF THE U.S. DOLLAR STRENGTHENS AGAINST THE EURO?? WHAT IF THE COST OF A BARREL OF OIL KEEPS ON DROPPING?? WHAT FINANCIAL HEDGES DOES IBERDROLA HAVE IN PLACE TO ENSURE AGAINST SUCH FINANCIAL RISKS? WHAT GUARANTEE DOES THE STATE OF NEW YORK HAVE, OR FOR THAT MATTER, EACH OF THE NORTHEASTERN STATES THAT SIGNED SIMILAR DEALS, TO ENSURE THAT IBERDROLA DOES NOT CLOSE THE U.S. FACTORIES/ASSEMBLY FACILITIES IT BUILDS IN FAVOR OF MOVING LOWER LABOR COST JURISDICTIONS IN ASIA??]
Allure of wind energy
Wind energy isn't as powerful or predictable as nuclear power, coal-fired or natural-gas-fired generators, but it is not insignificant. New York has set a goal of getting 25 percent of its electricity from renewable sources such as wind by 2013. Iberdrola already runs a wind farm in Lewis County, east of Lake Ontario, and the company has proposed 10 additional wind farms throughout upstate, including three Rochester-area facilities that could generate 258 megawatts of electricity, potentially powering more than 70,000 homes yearly.
But if Iberdrola owns RG&E and NYSEG, the company will control the distribution of electricity as well as its generation — a dual role that the Public Service Commission has opposed for more than 10 years on the principle that such "vertical integration" is anti-competitive.
Iberdrola has said it would walk away from the Energy East deal if forced to give up ownership of the wind farms, which it claims aren't competitive generators because of the variable nature of wind power.
That same variable nature also means Iberdrola could not control market prices, the company argued. Yet the idea of price manipulation by wind farms is not far-fetched to some.
"Once you have the energy and transmission, there are any number of clever things you can do," said Robert McCullough, managing partner of McCullough Research of Portland, Ore.
"The (PSC) staff is entirely correct."
One tactic is to withhold power when demand is high, driving up the price. But how is the price set?
Forty-five percent of electricity is sold on the day-ahead market and 5 percent is sold on the separate real-time, or instant, market, according to spokesman Kenneth Klapp of the New York Independent System Operator, which operates the state's power grid. (The other 50 percent is sold under contractual agreements.)
For the 50 percent of energy that's subject to market fluctuations, the Independent System Operator uses an industry standard known as the uniform clearing price system. The price goes up based on demand. When demand is satisfied, higher bids fail.
But final prices tend to reflect the last, highest bid, and Iberdrola would have motive to keep prices high through tactics such as withholding power, critics have said.
Iberdrola countered that wind farms aren't known to set going-rate electricity prices anywhere in the world. Sellers take what they can get, according to Pedro Azagra, the Spanish company's director of corporate development. The only reason U.S. wind farms make money is usually because of subsidies from the state, according to Azagra.
The other major concern is that Iberdrola could interfere with generation plants and wind turbine companies seeking to connect to the grid in RG&E and NYSEG territory.
Iberdrola said there were substantial penalties, including fines and forfeiture of profits, to deter such illegal behavior. But McCullough, who testified to the U.S. Senate about corrupt energy titan Enron Corp., said market surveillance by the state grid operator and U.S. Federal Energy Regulatory Commission was likely to be spotty and could not prevent all abuses.
Other states
Regulatory agencies in three states — Connecticut, Maine and New Hampshire — have already approved the Iberdrola acquisition of Energy East. Still, some of the same questions arose during regulatory hearings in those states.
Some agencies questioned whether the deal would help consumers.
In Connecticut, for instance, the state Office of Consumer Counsel contended that Iberdrola was, at best, vague in its claims about the benefits for customers.
"The massive size and financial wherewithal enjoyed by Iberdrola was often touted as a benefit for consumers and public policy ... but in response again to questioning by the department staff, the (Iberdrola) witnesses could not, or would not, offer anything concrete as assurance that this claimed benefit would in fact be of any benefit at all," Connecticut Consumer Counsel Mary J. Healey wrote in an October 2007 opinion about Iberdrola's answers to questions from the staff of the state's Department of Public Utility Control.
But one key and soothing condition has been local staffing and control.
The Connecticut Consumer Counsel's Office was heartened that Iberdrola planned to keep local utility management intact, said Richard Sobolewski, the office's supervisor of technical analysis, in a phone interview.
The Consumer Counsel's Office, which did not oppose the merger, wasn't fearful of foreign ownership of local utilities, Sobolewski said. Already, he said, some Connecticut water utilities are owned by foreign corporations.
"In this global economy we have now, you can't just say, 'We don't want foreign ownership,'" Sobolewski said.
Iberdrola maintained in Connecticut, as elsewhere, that the merger would have no adverse impact upon customers, and the state's Department of Public Utility Control concurred, approving the deal in November.
In Maine, worries about foreign ownership — especially questions about whether a mammoth corporation based in Spain would care much about American-based utility consumers — did arise.
For one Maine organization, a nonprofit called Friends of the Coast, those fears were especially important: The organization tries to ensure that 700-plus tons of nuclear waste stored at a decommissioned nuclear power plant, the Maine Yankee Atomic Power Station, will stay secured and not threaten nearby waterways.
"There's an element of distance because of the size (of Iberdrola)," said Raymond Shadis, Friends of the Coast executive director.
Friends of the Coast is a small organization, Shadis said, and he worried that Iberdrola might consider it more a nuisance that a reasonable arbiter of public safety.
But, he said, he was pleasantly surprised that the company met with Friends of the Coast and quelled the organization's anxieties.
"They were easy to work with," he said.
In New York, Iberdrola similarly has sought to assure consumers and officials that its ownership wouldn't mean drastic changes.
In Rochester, for example, management of both RG&E and NYSEG would remain in place and continue to operate the utilities, Iberdrola said. The long-familiar names of the two companies also would be retained.
Issues at a glance
Iberdrola SA of Bilbao, Spain, proposes to buy Energy East Corp., the parent of Rochester Gas and Electric Corp. and New York State Electric and Gas Corp., for $4.5 billion. The state Public Service Commission is expected to rule on the acquisition Wednesday. Here are key arguments for and against the deal:
Topic
Pros
Cons
Consumer rates
Iberdrola promises $201 million in rate relief for RG&E and NYSEG customers and says state regulators are demanding of Iberdrola at least three times what they have required in past utility mergers.
Competition
Ownership of both generation and distribution facilities, as Iberdrola proposes, isn’t monopolistic because wind power isn’t a competitive form of generation. [??]
PSC operates under principle that power generation must be separate from transmission and distribution. Making an exception for Iberdrola would violate policy and raise the possibility that Iberdrola could keep out competing wind energy companies.
Economic development
Iberdrola promises to invest $2 billion in wind energy projects in the state. Approval of deal would show that New York isn’t hostile to business.
Company’s investment promise isn’t enforceable and is nothing more than arm-twisting to win approval. Other wind energy developers already are investing in New York.
Foreign ownership
International ownership of utilities has become common. Iberdrola already owns Scottish Power. National Grid of the United Kingdom owns Niagara Mohawk in New York state.
PSC staff says ownership by a multinational company raises management issues because Iberdrola is so large it might not know what all its subsidiaries are doing.
Environment
Iberdrola’s expertise in wind power will help move New York state toward goal of generating 25 percent of electricity by renewable means such as wind and hydropower by 2013.
Wind power is too variable to be a reliable source of energy, poses a threat to birds and creates visual and noise pollution.
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http://media.cleantech.com/3054/iberdrola-bids-for-rest-of-wind-developer-rokas
Iberdrola bids for rest of wind developer Rokas
CleanTech.com
July 2, 2008
The Spanish renewable energy company offers €175 million for the remaining shares of the Greek wind developer.
Madrid-based Iberdrola Renewables has launched a €175 million offer to acquire the shares of Greek wind developer Rokas Group that it does not already own.
Iberdrola Renewables, a subsidiary of Spanish energy group Iberdrola, said it holds 52.7 percent of Rokas' ordinary shares and 47.3 percent of the preferred stock.
The Spanish renewable company said its offer is €16 for each ordinary Rokas share and €11 for the preferred stock.
Rokas has 13 wind farms with 193.3 megawatts of capacity, as well as a 171.6 kilowatt solar photovoltaic plant, according to Iberdrola Renewables.
Iberdrola Renewables first moved into the Greek market in December 2004 when it acquired 21 percent of Rokas' ordinary shares.
Since then, the company said it has gradually increased its presence in the Greek wind power market with 49.9 percent of Rokas' stock held at the end of 2005 and 52.7 percent in March last year.
Iberdrola Renewables said the deal would consolidate its wind energy ownership in Greece, increasing its installed capacity to 217 MW, up from 124 MW.
The company said the transaction is subject to authorization by the Greek stock market regulator, which is expected to be obtained by the end of this month. Iberdrola hopes to complete the deal in mid-September.
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http://media.cleantech.com/2982/iderbola-signs-6b-turbine-deal
Iberdrola signs €6.3B turbine deal
June 16, 2008
The deal, touted as the sector's largest, includes the installation and operation of 4,500 MW of wind power.
Spain's electrical giant, Iberdrola Renewables said it signed a €6.3 billion supply contract for wind turbines from Madrid's Gamesa, a wind turbine manufacturer.
Touting it as the "sector's largest ever transaction," Iberdrola, also Madrid-based, said it is acquiring turbines with a total capacity of 4,500 megawatts for wind projects in Europe, the U.S. and Mexico.
According to Iberdola, the €6.3 billion figure is to encompass overall costs associated with installing the turbines, including the cost of the turbines, cost of transport, and moneys associated with civil works and interconnections, both at the wind farms and to the grid.
In addition to installation, Iberdrola said the contract covers turbine startup, operational services and maintenance during the life of the guarantee.
Iberdrola said the deal would help the company meet more than 70 percent of its requirements up to 2012. The company said its current turbine supply stands at 42,280 MW.
The company asserts the deal would help to "avoid one of the major uncertainties in the business by assuring the installation of a significant portion of its projects for the medium term."
The Spanish electric company's last turbine contract with Gamesa was in 2006 and was for a reported 2,700 MW of power.
Iberdrola's most recent turbine contracts include General Electric for 300 MW, Mitsubishi for 300 MW, Suzlon Wind Energy for 700 MW, and Ecotencia for 310 MW.
[IS GENERAL ELECTRIC OUTSOURCING 'GREEN COLLAR' JOBS TO IBERDROLA??]
In addition to the supply contract, the Iberdrola and Gamesa announced a partnership to combine efforts to promote, develop and exploit wind farms in Spain and continental Europe.
Under the partnership, two joint companies are to be formed, one in Spain and the other abroad.
Iberdrola is to hold 77 percent of the new Spanish venture and Gamesa is to hold 23 percent, while Iderbola said its shareholdings in the international venture would be 76 percent, with Gamesa holding 24 percent.
Once the partnership is approved by antitrust authorities, Gamesa said it can increase its shareholding in the jointly owned Spanish company up to 32 percent, relative to the number of additional megawatts that correspond to new wind farms.
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http://www.syracuse.com/news/index.ssf/2008/06/judge_recommends_state_psc_rej.html
Judge says state should reject Iberdrola's purchase of NYSEG, RG&E parent
by The Associated Press
Monday June 16, 2008, 6:31 PM
Albany, NY -- Iberdrola SA's plan to acquire Energy East Corp. hit another snag Monday.
A state administrative law judge recommended New York utility regulators reject the proposed $4.6 billion deal, saying it doesn't satisfy the public interest requirement of state utilities law.
Iberdrola, a Spanish energy company, needs approval from New York's five-person Public Service Commission to buy Energy East. It is the parent company of Rochester Gas & Electric Corp. and New York State Electric & Gas Corp.
PSC staff oppose the deal because of concerns about whether it will best serve the public in cost and competitiveness.
They recommended a series of conditions that Iberdrola must meet, including $646 million in rate cuts and other benefits to customers and selling all of its power-generation plants in the state. Since 1996, the PSC has pursued a goal of having utilities get out of the generation business to encourage competition.
Iberdrola objected to some of the PSC's demands -- including sale of its interest in wind and hydropower generating plants -- and the case was referred to Administrative Law Judge Rafael Epstein for review. The PSC is not bound to follow Epstein's recommendations.
Epstein's 151-page opinion recommended rejecting the deal because it would not be in the public interest.
Should the commission approve the deal anyway, Epstein recommended conditions similar to those proposed by PSC staff. Epstein said Iberdrola should sell generating plants that are connected to RG&E's or NYSEG's distribution network and provide the rate cuts advanced by PSC staff.
The judge also recommended that Iberdrola should be subject to financial and structural safeguards to insulate NYSEG and RG&E from risks associated with Iberdrola's other businesses.
Epstein's ruling did not address the merits of Iberdrola's recent promise to invest $2 billion in wind energy in New York over the next five years if the Energy East purchase goes through.
[HENCE, ISN'T THE PROMISE UNENFORCEABLE???]
Mindy Bockstein, executive director of the state's Consumer Protection Board, said the board will formally ask the PSC to consider the implications of the investment when making its decision.
Sen. Charles Schumer said the judge's ruling "defies common sense."
"At a time when gas prices are $4 a gallon, and we desperately need to develop alternative sources of energy, to place such severe restrictions on the world's leading wind power producer to develop wind power cries out for reversal," Schumer said.
James Denn, a PSC spokesman, said there has been no date set for a final decision.
A spokesman for Iberdola said the company is reviewing the judge's recommendations and had no immediate comment.
PSC approval is the last hurdle for Iberdrola's acquisition of Energy East, according to Epstein. Regulators in Connecticut, Massachusetts and Maine -- also served by Energy East -- and various federal agencies have signed off on the deal.
This report is based on reporting by The Associated Press and The Post-Standard.
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http://74.125.95.104/search?q=cache:QfUA6DpxiyEJ:www.reuters.com/articlePrint%3FarticleId%3DUSL0974987220080609+Iberdrola+%2B+factories&hl=en&ct=clnk&cd=12&gl=us
Industry ministry rejects Iberdrola appeal on ACS
Reuters
June 9, 2008
MADRID, June 9 (Reuters) - Spain's Industry Ministry has rejected an appeal by power company Iberdrola (IBE.MC: Quote, Profile, Research, Stock Buzz) to limit the voting rights of builder ACS (ACS.MC: Quote, Profile, Research, Stock Buzz) and prevent it from building up a larger stake in Iberdrola, industry sources said on Monday.
Iberdrola had appealed a decision earlier this year by Spain's energy watchdog after Iberdrola sought to cap ACS when the construction company admitted it had held talks with French power giant EDF (EDF.PA: Quote, Profile, Research, Stock Buzz) on a possible takeover of Iberdrola.
Iberdrola wanted to limit ACS's voting rights to 3 percent and its share stake to 10 percent. ACS currently owns just under 13 percent of Iberdrola in shares and derivatives and has permission from the regulator to increase its stake.
[IBERDROLA ALSO SOUGHT TO LIMIT NEW YORK STATE CONSUMER'S AND PUBLIC SERVICE COMMISSION'S ABILITY TO IMPOSE CONDITIONS ON THEIR ACQUISITION OF ENERGY EAST. HMMM...THIS SEEMS TO REFLECT A PATTERN...]
ACS wanted to leverage the stake in a takeover deal with EDF in which Union Fenosa (UNF.MC: Quote, Profile, Research, Stock Buzz), another Spanish power company in which ACS owns over 40 percent, would take power generation assets equivalent to the value of the ACS Iberdrola stake.
No one at the Industry Ministry was available for comment.
[OF COURSE NOT! HOW OFTEN IS A EUROPEAN MINISTRY ACTUALLY HELD ACCOUNTABLE TO THE PUBLIC??]
Iberdrola has been the source of constant speculation since ACS's interest emerged with various merger combinations touted in order to block EDF's possible entry into the Spanish market.
The merger talk has quietened in recent weeks since EDF said it had made a preliminary bid for UK nuclear operator British Energy (BGY.L: Quote, Profile, Research, Stock Buzz).
British Energy said on Monday, however, that none of the offers it has received so far were high enough. (Reporting by Joe Ortiz, editing by Richard Chang)
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http://www.bizjournals.com/portland/stories/2008/06/02/daily34.html?ana=from_rss
Iberdrola to invest $2B in wind power farms in New York
Portland Business Journal
June 5, 2008
Spanish utility giant Iberdrola wants to invest $2 billion developing wind power farms across New York state.
But that funding hinges on New York's Public Service Commission's acceptance of Iberdrola's proposed $4.5 billion purchase of Energy East Corp. (NYSE: EAS) and its 63,000 customers in the Albany, N.Y., area.
Iberdrola Renewables, the company's U.S.-based renewable energy division in Portland, likely would be involved in building the wind farms, according to spokeswoman Jan Johnson.
Iberdrola, the second-largest wind energy operator in the U.S., earlier committed to at least $100 million in renewable energy investments in New York, but now appears to be upping the ante. Top company officials gathered with New York state legislators in Albany earlier this week to urge New York's Public Service Commission to approve the deal.
"We don't have to do it, but we want to do it," said Pedro Azagra, Iberdrola's director of corporate development. "The only thing we want is to invest as much as we can here."
But, Azagra added, Iberdrola plans to pull back on the $2 billion in wind farm investments if the Public Service Commission nixes the Energy East acquisition.
[WILL THE NEW YORK STATE PUBLIC SERVICE COMMISSION PERMIT IBERDROLA TO GET ITS WAY, EVEN IF IT VIOLATES NEW YORK STATE LAW & EQUITY?? YOU BET, ON THE BALD, UNENFORCEABLE PROMISE OF 'GREEN COLLAR' JOBS!!]
The deal has already received necessary federal approval and the OK from the four other Northeast states that Energy East serves. New York's Public Service Commission is the last checkpoint that the deal must clear.
Iberdrola has said it wants to wrap up the process soon, as early as this month. It brought the deal to the commission for review 10 months ago. But acquisition review proceedings could take several months more.
All contents of this site © American City Business Journals Inc. All rights reserved.
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http://livemodern.com/greenblogs/4de81e249731fe3be41b1eb16095a52d
EdF and Iberdrola, a Renewable Energy Powerhouse?
by Denis Du Bois from Energy Priorities (green blog)
3/22/2008
Electricite de France is rumored to be working on a deal in which EdF could acquire a controlling share in Iberdrola. The combination would create a renewable energy giant with multinational clout.
The French utility Electricite de France SA has had exploratory talks with a construction company in Spain, with its eye on the Spanish energy market, according to an AP wire story.
The Wall Street Journal reported that EdF and Actividades de Construccion y Servicios SA (ACS) are in advanced talks about teaming up to buy Iberdrola DS and Union Fenosa SA -- two major Spanish utilities -- for US$134 billion.
The combination of these two giants of renewable energy would create a global powerhouse with considerable clout in the supply chain and in politics.
EdF is the world's largest utility. Its subsidiary Energies Nouvelles is a major player in the renewable energy sector. One of the company's larger endeavors in 2007 was to start construction of a 300 MW wind farm off the coast of Belgium.
Energies Nouvelles operates four U.S. wind farms with 508.5 MW of total capacity owned by MidAmerican Energy Company. Energies Nouvelles Reparties (ENR) is a new EdF venture in equipment manufacturing, such as solar water heaters, photovoltaic modules, heat pumps and wood-fired heating equipment.
Iberdrola Renewables is a major operator of utility-class wind and solar installations, claiming 7,704 MW in clean energy production capacity worldwide.
Within the last few weeks it completed commissioning of the 223 MW Klondike III wind farm in Oregon.
The utility group last month acquired rights to a portfolio of 50 wind projects, with a total of 1,600 MW, in Romania. In 2007 New Energy Finance ranked Iberdrola Renewables as the world's leader in installed wind power capacity.
The acquisition deal has been only partly confirmed by EdF, and could face insurmountable resistance from regulators or the acquisition targets.
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http://media.cleantech.com/2316/acciona-opens-first-wind-turbine-facility-in-u-s
Acciona opens first wind turbine facility in U.S.
January 17, 2008
CleanTech.com
Spanish energy giant, a leader in wind, servicing U.S. demand with a local plant. Acciona today marked the opening of a first wind turbine production plant in the United States.
The new facility in West Branch, Iowa cost $23 million and was constructed in seven months.
It is to produce 200 wind turbines in 2008, with plans to increase to 400 turbines per year in the future.
The plant will supply turbines primarily for Acciona Energy wind farms throughout North America based on technology from its wind turbine manufacturing subsidiary, Acciona Windpower, in producing its AWP 1.5-77 models.
The plant is expected to provide more than 100 new jobs.
Acciona is a leading developer of windparks worldwide, with more than 5,300 MW installed in twelve countries.
It's also a significant solar developer, recently launching Nevada Solar One, the largest solar thermal power plant (64 MW) built in the world in the last 17 years (see Biggest solar thermal plant in 16 years connects to Nevada grid).
It also has biomass plants, small hydro power stations and produces biodiesel from vegetable oil and bioethanol from wine-surplus alcohol.
The new wind turbine plant in Iowa is Acciona’s fourth, with two other wind plants in Spain and one in China. In total, the company now has a global production capacity up to 2,280 MW of wind turbines a year, it said.
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http://www.charleston.net/news/2007/jul/15/turbine_shortage_knocks_wind_out_projects/
Turbine shortage knocks wind out of projects
By KEITH JOHNSON
The Wall Street Journal
July 15, 2007
The race to build new sources of alternative energy from the wind is running into a formidable obstacle: not enough windmills.
In recent years, improved technology has made it possible to build bigger, more efficient windmills. That, combined with surging political support for renewable energy, has driven up demand. Now, makers can't keep up, mostly because they can't get the parts they need fast enough.
Numerous wind-power projects from Virginia to California have been stalled due to the shortage. But for some renewable-energy companies in Europe, where wind power has been in vogue for almost two decades, the logjam is a lucrative opportunity.
These firms anticipated a shortage of turbines and locked in orders with makers. They're now using their considerable buying power to gobble up smaller utilities in the U.S. that couldn't otherwise get their hands on turbines.
[A VERY CLEVER MARKET ENTRY/ACQUISITION STRATEGY TO DOMINATE THE U.S. RENEWABLE ENERGY MARKET, RELYING PREDOMINANTLY ON OUTSOURCING MANUFACTURING TO OVERSEAS (NON-U.S.) FACTORIES TO PRODUCE THE TURBINES AND ITS THOUSANDS OF COMPONENT PARTS AT LOWER LABOR & MATERIAL COST. THUS, ANY PROMISE TO BUILD WIND TURBINE FACTORIES WITHIN THE U.S. SHOULD BE SCRUTINIZED TO CONFIRM WHETHER IT IS MERELY 'GREEN COLLAR' JOB 'WINDOW-DRESSING' INTENDED TO SECURE REGULATOR APPROVAL OF ACQUISITIONS].
That was the case with Community Energy Inc., a firm in Wayne, Pa. After trying for years to kick-start wind-power projects in the U.S., the company had built only two small wind farms; a third sat idle. Brent Alderfer, the founder and chief executive, said he had few problems acquiring the necessary permits and funding. But when it came to getting windmills, he faced a multiyear delay.
"We were like an airline sitting there and being told we had to wait three years to get our airplanes," he says.
In late 2005, Alderfer contacted Iberdrola SA, a Madrid-based utility that has emerged as one of the world's leaders in renewable energy. Six months later, Iberdrola purchased Community Energy for $40 million. Two months after that, technicians had outfitted the company's stillborn project with gleaming white turbines that started churning out enough clean electricity for about 6,500 homes.
"We couldn't have done this on our own — not then, not in five years' time," says Alderfer.
Moving parts
Modern wind turbines are astonishingly complicated machines, containing more than 8,000 components and requiring special transformers to turn their spinning blades into electricity.
Though commonly called windmills, they're technically wind turbines. Manufacturers depend on a network of component suppliers that, in turn, need years to ramp up production. That's created a bottleneck for the turbinemakers.
Iberdrola's strategic advantage stems in part from $4.09 billion bet it made last year to lock up most of the order book of Spanish turbinemaker Gamesa SA, the world's second largest, through 2009. Iberdrola also holds a 24 percent equity stake in Gamesa.
In addition to Community Energy, Iberdrola snapped up two other small U.S. developers last year in Iowa and Virginia, both of which lacked the funding and the turbines to get going. Last month, it entered into a deal to buy its first regulated U.S. utility company, Energy East Corp., of Portland, Maine, for $4.58 billion, in part to take advantage of U.S. tax credits for wind.
Though still a relatively small force on the U.S. energy grid, wind power is on the rise as oil prices and environmental concerns soar.
Governments from Beijing to Sacramento are showering the sector with subsidies in an effort to boost production of clean energy and reduce emissions of greenhouse-gases such as carbon dioxide.
Europe now plans to produce 20 percent of its energy from renewable sources by 2020, up from about 6 percent today, with wind power playing the leading role.
In the U.S., more wind power was installed last year than in any other country in the world: 2,454 megawatts, or more than the equivalent of two nuclear reactors.
Locally, officials with state grant money are setting up a monitoring station at the former Charleston Naval Base to study the coastal breeze 150 feet in the air to gauge whether there is enough wind up there to generate electricity. There are no plans for a turbine at this point.
Despite the recent action, the U.S. still lags behind other countries that have spent decades nurturing wind power with subsidies and price supports. Germany has fewer wind resources — breezy, wide-open spaces — than the state of North Dakota, for instance, but has twice as much wind power as the entire U.S.
Spain, with one-seventh the population of the U.S., has the same amount of wind power. Overall, only about 1 percent of power in the U.S. comes from wind.
The turbine shortage could have a significant impact on how quickly the industry can continue to grow in the near term, as well as on what shape it will take in the future. Just five manufacturers produce more than 80 percent of the world's wind turbines. A midsize, 1.5-megawatt turbine costs about $1.2 million.
Miguel Salis, head of the Madrid-based Eolia, a fund that supplies financing and development know-how to small wind-farm developers, says "The biggest restriction right now to wind power's growth — everywhere, not just in the U.S. — is the lack of turbines."
He says that so many developers have "projects under way but can't get them completed, often because the turbinemakers don't give them the time of day."
Roller coaster ride
Because wind power was basically a cottage industry until recently, it was slow to develop a large group of professional manufacturers. Some turbine manufacturers, such as Siemens Wind, are offshoots of large engineering groups. General Electric Co. bought Enron's wind division when the Houston company imploded. Gamesa started life half a century ago designing propeller blades for aircraft and still makes most of its own blades.
In the U.S., there's another potential threat to growth: erratic government support for wind power.
Even though wind power has made technical strides recently, energy firms still rely on subsidies because it costs more to generate electricity with wind turbines than other power plants such as coal, natural gas or nuclear. Wind power requires intensive capital investment in a short period of time and has added costs such as upgrading transmission systems. According to the International Energy Agency in Paris, wind farms cost between 4 and 14 cents to generate a kilowatt hour; coal-fired plants cost between 2.5 and 6 cents.
Some 20 states now have price supports for wind-generated electricity, and there is a federal tax credit to encourage new wind-park development. But there is no federal requirement for utilities to buy green energy, as there is in the United Kingdom, Denmark and Germany.
The lack of a stable, long-term regulatory environment has created a wind-power roller coaster. Developers were never sure their projects would make economic sense a few years down the road if the regulatory climate changed. Foreign turbine manufacturers were reluctant to build U.S. factories.
[IS THIS NOT 'SUBTLE' PRESSURE TO INFLUENCE U.S. CLIMATE CHANGE/ RENEWABLE ENERGY POLICY??]
Today, states such as Iowa, Pennsylvania, Minnesota and Oregon have gone out of their way to lure foreign turbinemakers.
Suzlon [INDIA] is building a turbine plant in Minnesota. Siemens Wind [GERMANY] and Acciona Energia SA of Spain both announced plans to open turbine factories in Iowa. Gamesa [SPAIN] has three plants operating in Pennsylvania.
In North Carolina, PG Industries, which cut hundreds of jobs while competing with China to manufacture fiberglass several years ago, is now spending $20 million over three years to manufacture the product for turbine blades near Shelby. [PROVIDING AMERICAN 'GREEN COLLAR' JOBS] The American Wind Energy Association, a nonprofit that promotes the industry, says factories in the Carolinas are perfect for making the windmill tools.
In a few years' time, the new factories could help ease the current bottleneck. But in the short term, the supply crunch has shaken the economics of wind power.
Lots of room
In some ways, wind power is a victim of its own success. Rising fossil-fuel prices and bigger and more sophisticated turbines have brought wind power closer than ever to being competitive on price with traditional power sources. Modern machines are 10 to 20 times the size of the windmills first installed in California in the 1980s. Bigger machines have exponentially changed the economics of wind power because they take better advantage of the wind and work more hours than the smaller, older machines.
That, in turn, has sparked a boom in demand for new wind-power projects worldwide.
Better technology and growing political support for clean energy should have made life easier for Community Energy. When Brent Alderfer started his company in 1999, there were no commercial wind farms operating east of the Mississippi.
Instead, as wind power became more attractive, his job got tougher. After finishing the second wind farm, a modest 24-megawatt project in New Jersey, Community Energy executives realized that upcoming projects would have to be much larger in order to be economically feasible. Some would require as many as 100 new turbines.
"The whole thing moved quickly beyond our ability to finance it," Alderfer says.
The U.S. wind industry was in one of its periodic booms. After two years with virtually no new wind power, federal tax credits were renewed for 2005 and 2006. Suddenly, wind farms were cropping up everywhere. Oil-rich but windswept Texas overtook California as the leading wind-power state.
Community Energy was trying to stay in the race. In late 2005, the company sought to outfit its latest wind farm, at Locust Ridge, Pa., but couldn't get the machines. Locust Ridge was put on hold again.
Then he decided to call Iberdrola, the Spanish utility. At the time, Iberdrola didn't yet have a beachhead in the U.S., and executives thought it was a potential gold mine. Wind energy in the U.S. "is like Europe was years ago," says Xavier Viteri, the 46-year-old head of Iberdrola's renewable-energy business.
"There's a lot of room for development there, and there is a lot of expertise here."
[THE U.S. CONGRESS & U.S. STATE PUBLIC SERVICE COMMISSIONS ARE PRESENTING EUROPEAN WIND TURBINE COMPANIES WITH AN IRRESISTIBLE 'GOLD MINE' OF OPPORTUNITY, and PERMITTING THE ACQUISITION OF AMERICAN COMPANIES BASED ON THE OSTENSIBLE, BUT UNENFORCEABLE PROMISE TO 'CREATE' (at least temporarily) U.S. 'GREEN COLLAR' JOBS].
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http://www.newwindenergy.com/fileadmin/templates/PDF/07_09_07_TheWallStreetJournal_AlternativeEnergyHurtByAWidmillShortage.pdf
Alternative Energy Hurt By a Windmill Shortage - While Projects in U.S. Stall, Europe's Utilities Expand Their Reach
By KEITH JOHNSON
The Wall Street Journal – Current Affairs
July 9, 2007; Page A1
The race to build new sources of alternative energy from the wind is running into a formidable obstacle: not enough windmills.
In recent years, improved technology has made it possible to build bigger, more efficient windmills. That, combined with surging political support for renewable energy, has driven up demand. Now, makers can't keep up -- mostly because they can't get the parts they need fast enough.
POWER SPIN
• The Background: The U.S. lags other countries in wind-turbine capacity, and government support has been inconsistent.
• What's Ahead: Foreign players are moving into the U.S. market, with acquisitions and wind-farm projects.
Numerous wind-power projects from Virginia to California have been stalled due to the shortage. But for some renewable-energy companies in Europe, where wind power has been in vogue for almost two decades, the logjam is a lucrative opportunity. These firms anticipated a shortage of turbines and locked in orders with makers. They're now using their considerable buying power to gobble up smaller utilities in the U.S. that couldn't otherwise get their hands on turbines.
That was the case with Community Energy Inc., a company in Wayne, Pa. After trying for years to kick-start wind-power projects in the U.S., the company had built only two small wind farms; a third sat idle. Brent Alderfer, the founder and chief executive, said he had few problems acquiring the necessary permits and funding. But when it came to getting windmills, he faced a multiyear delay.
"We were like an airline sitting there and being told we had to wait three years to get our airplanes," he says.
In late 2005, Mr. Alderfer contacted Iberdrola SA, a Madrid-based utility that has emerged as one of the world's leaders in renewable energy. Six months later, Iberdrola purchased Community Energy for $40 million. Two months after that, technicians had outfitted the company's stillborn project with gleaming white turbines that started churning out enough clean electricity for about 6,500 homes.
"We couldn't have done this on our own -- not then, not in five years' time," says Mr. Alderfer.
Modern wind turbines are astonishingly complicated machines, containing more than 8,000 components and requiring special transformers to turn their spinning blades into electricity. Though commonly called windmills, they're technically wind turbines. Manufacturers depend on a network of component suppliers that, in turn, need years to ramp up production. That's created a bottleneck for the turbine makers.
Iberdrola's strategic advantage stems in part from a €3 billion, or $4.09 billion, bet it made last year to lock up most of the order book of Spanish turbine maker Gamesa SA -- the world's second largest -- through 2009. Iberdrola also holds a 24% equity stake in Gamesa.
In addition to Community Energy, Iberdrola snapped up two other small U.S. developers last year in Iowa and Virginia, both of which lacked the funding and the turbines to get going. Last month, it entered into a deal to buy its first regulated U.S. utility company, Energy East Corp., of Portland, Maine, for $4.58 billion, in part to take advantage of U.S. tax credits for wind.
Though still a relatively small force on the U.S. energy grid, wind power is on the rise as oil prices and environmental concerns soar. Governments from Beijing to Sacramento are showering the sector with subsidies in an effort to boost production of clean energy and reduce emissions of greenhouse-gases like carbon dioxide. Europe now plans to produce 20% of its energy from renewable sources by 2020, up from about 6% today, with wind power playing the leading role.
In the U.S., more wind power was installed last year than in any country in the world - - 2,454 megawatts, or more than the equivalent of two nuclear reactors. Despite the recent action, the U.S. still lags behind other countries that have spent decades nurturing wind power with subsidies and price supports. Germany has fewer wind resources -- breezy, wide-open spaces -- than the state of North Dakota, for instance, but has twice as much wind power as the entire U.S. Spain, with one-seventh the population of the U.S., has the same amount of wind power. Overall, only about 1% of power in the U.S. comes from wind.
The turbine shortage could have a significant impact on how quickly the industry can continue to grow in the near term, as well as on what shape it will take in the future. Just five manufacturers produce more than 80% of the world's wind turbines. A midsize, 1.5-megawatt turbine costs about $1.2 million.
Miguel Salis, the head of the Madrid-based Eolia, a fund that supplies financing and development know-how to small wind-farm developers, says, "The biggest restriction right now to wind power's growth -- everywhere, not just in the U.S. -- is the lack of turbines." He says that so many developers have "projects under way but can't get them completed, often because the turbine makers don't give them the time of day."
Makers need thousands of specially crafted parts, including gearboxes, blades and bearings, to build a turbine. Transformers vary depending on each country's electrical grid. And the type of turbine depends on the wind resources available: Relatively wind-poor Germany has always used larger turbines, while breezier Spain and China have based their growth on midsize turbines.
Vestas A/S of Denmark, the world's biggest turbine maker, says the supply problems are crimping its production capacity. The company produced about 880 megawatts of turbines in the first quarter, down from more than 1,000 megawatts in the fourth quarter of 2006. "We are no stronger than the last delivered component out of the 8,000 components," Ditlev Engel, Vestas chief executive told investors in May. Turbine makers are trying to make up the difference. Vestas is hoarding components to keep production steady, at the expense of working capital. Others are buying companies that make components to bring production in-house.
Siemens Wind AG of Germany, a unit of Siemens AG, two years ago bought Winergy, the leading maker of gearboxes for turbines. Suzlon Energy Ltd. of India snapped up a series of smaller component companies. Then, last month, it paid $1.8 billion to buy rival turbine maker REPower Systems AG of Germany, which gave it access to a new set of component suppliers.
Because wind power was basically a cottage industry until recently, it was slow to develop a large group of professional manufacturers. Some turbine manufacturers, like Siemens Wind, are offshoots of large engineering groups. General Electric Co. bought Enron's wind division when the Houston company imploded. Gamesa started life half a century ago designing propeller blades for aircraft, and still makes most of its own blades.
In the U.S., there's another potential threat to growth -- erratic government support for wind power. Even though wind power has made technical strides recently, energy firms still rely on subsidies because it costs more to generate electricity with wind turbines than other power plants such as coal, natural gas or nuclear. Wind power requires intensive capital investment in a short period of time, and has added costs like upgrading transmission systems. According to the International Energy Agency in Paris, wind farms cost between four and 14 cents to generate a kilowatt hour; coalfired plants cost between 2.5 and six cents.
Some 20 states now have price supports for wind-generated electricity, and there is a federal tax credit to encourage new wind-park development. But there is no federal requirement for utilities to buy green energy, as there is in the United Kingdom, Denmark and Germany. And the tax credit, started in 1992, depends on a biannual congressional approval. An effort to introduce federal support for wind power was shot down this month in the Senate.
The lack of a stable, long-term regulatory environment has created a wind-power roller coaster. Developers were never sure their projects would make economic sense a few years down the road if the regulatory climate changed. Foreign turbine manufacturers were reluctant to build factories in the U.S. Vestas scrapped plans for a U.S. factory three times because of uncertainty. This spring, it announced it would build a turbine plant in Windsor, Colo.
Today, states such as Iowa, Pennsylvania, Minnesota and Oregon have gone out of their way to lure foreign turbine makers. Suzlon is building a turbine plant in Minnesota. Siemens Wind and Acciona Energía SA of Spain both announced plans to open turbine factories in Iowa. Gamesa has three plants operating in Pennsylvania.
In a few years' time, those new factories could help ease the current bottleneck. But in the short term, the supply crunch has shaken the economics of wind power. European utility firms, meanwhile, are buying up U.S. energy firms. They say they believe growing consensus on the need to fight climate change will lead to a more stable regulatory framework for renewable energy.
[THIS IS CLEAR EVIDENCE THAT EUROPEAN COMPANIES POISED TO ECONOMICALLY BENEFIT FROM CLIMATE CHANGE ARE COMING ASHORE IN THE UNITED STATES TO NOT ONLY ACQUIRE U.S. UTILITIES AND RENEWABLE ENERGY COMPANIES, BUT ALSO TO EFFECTUATE / INFLUENCE U.S. CLIMATE CHANGE & ENERGY POLICY. See:
Request for Rulemaking to Provide American Depository Receipt Owners With Certain Traditional Shareowner Rights When Foreign Corporations Advocate On Significant U.S. Social Policy Issues Or Have Significant U.S. Social Impacts, SEC Petition 4-525 (Aug. 30, 2006) at: http://www.sec.gov/rules/petitions/2006/petn4-525.pdf ].
Earlier this year, Portuguese utility Energias de Portugal SA, or EDP, paid about $2.7 billion for Horizon Wind Energy of Houston. Acciona Energia SA of Spain bought EcoEnergy LLC, a unit of the Morse Group in Freeport, Ill., last month; it plans to roll out about 1,500 megawatts of wind power in the Midwest over three years. And BP Alternative Energy, a division of U.K.-based BP PLC, snapped up Virginia-based Greenlight Energy Inc. last year for about $100 million.
European companies are estimated to own 20% of all the wind energy in the U.S., says Emerging Energy Research, a wind-power study group based in Cambridge, Mass.
American firms are now hustling to secure their own windmills to keep pace. Invenergy LLC, based in Chicago, signed a $1 billion deal with GE in May to get its hands on turbines to supply its ambitious development plan.
In some ways, wind power is a victim of its own success. Rising fossil-fuel prices and bigger and more sophisticated turbines have brought wind power closer than ever to being competitive on price with traditional power sources. Modern machines are 10 to 20 times the size of the windmills first installed in California in the 1980s. Bigger machines have exponentially changed the economics of wind power because they take better advantage of the wind and work more hours than the smaller, older machines.
That, in turn, has sparked a boom in demand for new wind-power projects worldwide.
The U.S. has quadrupled its wind-power capacity since 2000. China, which had only 346 megawatts of wind power installed in 2000, now has 2,500 megawatts, and expects to catch up to the U.S. within three years. World-wide, wind capacity has increased from 17,800 megawatts in 2000 to 74,300 megawatts at the end of last year, according to the Global Wind Energy Council, a trade group.
Better technology and growing political support for clean energy should have made life easier for Community Energy's Mr. Alderfer. When he started his company in 1999, there were no commercial wind farms operating east of the Mississippi.
Instead, as wind power became more attractive, his job got tougher. After finishing their second wind farm, a modest 24-megawatt project in New Jersey, Community Energy executives realized that upcoming projects would have to be much larger in order to be economically feasible. Some would require as many as 100 new turbines. "The whole thing moved quickly beyond our ability to finance it," Mr. Alderfer says.
The U.S. wind industry was in one of its periodic booms. After two years with virtually no new wind power, federal tax credits were renewed for 2005 and 2006. Suddenly, wind farms were cropping up everywhere. Oil-rich but windswept Texas overtook California as the leading wind-power state.
Community Energy was trying to stay in the race. In late 2005, the company sought to outfit its latest wind farm, at Locust Ridge, Pa., but couldn't get the machines. Mr. Alderfer talked with GE, the biggest U.S. turbine maker, but was told he would have to pay deposits against delivery of turbines in 2008 or 2009. That would mean going back to Community Energy's private holders to ask them to stump up more money, which Mr. Alderfer was loath to do. Locust Ridge was put on hold again. "What are we going to do with this project?" he recalls thinking.
Then he decided to call Iberdrola, the Spanish utility. At the time, Iberdrola didn't yet have a beachhead in the U.S., and executives thought it was a potential gold mine. Wind energy in the U.S. "is like Europe was years ago," says Xavier Viteri, the 46-year-old head of Iberdrola's renewable-energy business. "There's a lot of room for development there, and there is a lot of expertise here."
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http://www.forbes.com/markets/2007/06/26/iberdrola-energy-update-markets-equity-cx_vr_0626markets23.html
Spanish Acquisition Sends Energy East Soaring
By Vidya Ram,
6/26/07
LONDON -
Spain's Iberdrola has paid a sizable markup for Energy East, the New Gloucester, Maine-based utility supplier, and may have to issue new stock to pay for the deal. But for a company that has its long-term performance in mind, $4.5 billion is a price worth paying both for a proper foothold in the U.S. market, and an opportunity to avail itself of tax incentives in the renewables market.
The news that Iberdrola (other-otc: IBDRY - news - people ) is paying $28.50 a share, 27% above Friday's closing price of $22.37, sent shares in Energy East (nyse: EAS - news - people ) soaring by $3.84, or 17%, to $26.38 in early-afternoon trading in New York. The markup and the news that Iberdrola is considering issuing new stock hit the Spanish company's shares, which ended the day down down 1.63 euros ($2.19), or 3.8%, at 41.21 euros ($55.50).
The deal has yet to get the approval of Energy East shareholders, the Federal Energy Regulatory Commission and state agencies. Iberdrola has stressed that the deal is a "friendly" one and is expected to get regulatory approval toward the end of 2008.
Iberdrola has said it may carry out a capital hike to fund the acquisition and is exploring possibilities, including the issue of new shares, though this will not take place until the deal is near completion.
Iberdrola has yet to explain the reasons behind the hefty premium it is paying in terms of expected synergies. Victor Peiro Peiro, an analyst at Spain's Caja Madrid, said it will hope to avoid the problems that have plagued several European acquisitions recently, where plans have fallen through at the last minute as a result of the low premium paid.
In addition, Energy East, which has a total of 3 million customers, is a good-sized company for Iberdrola to acquire to begin its first foray into utility distribution in the U.S.
Through its purchase of Scottish Power, Iberdrola already has ownership of
Portland, Ore.-based PPM Energy, which operates several American wind farms. But to take advantage of the tax incentives available to companies involved in renewable energy, Iberdrola must make its profits in the U.S. With the purchase of Energy East, which is primarily an electricity distributor, Iberdrola hopes to reap the benefits of deals that have already been made.
"Iberdrola is thinking in the medium and long term," said Peiro.
“The transaction enhances our international expansion and consolidates our position as one of the world's leading electricity companies,” said Iberdrola Chairman Ignacio Galan.
Iberdrola has said it will allow Energy East's subsidiaries to continue to operate under their current names. One of the subsidiaries,
Central Maine Power, 
delivers 80% of Maine's electricity. Others include Berkshire Gas, Connecticut Natural Gas (other-otc: CTGSO - news - people ), New York State Electric and Gas (other-otc: NGEGN - news - people ), Rochester Gas and Electric (nyse: RGE - news - people ) and Southern Connecticut Gas.
Iberdrola is not the first European energy company to take advantage of the cheap U.S. dollar. In April Italy's Eni (nyse: E - news - people ) bought Dominion Resource's (nyse: D - news - people ) Gulf of Mexico operations for $4.8 billion.
[WHAT LEGAL COMMITMENT WILL PREVENT THESE EUROPEAN WIND COMPANIES FROM PULLING OUT OF THE UNITED STATES and/or FROM OUTSOURCING U.S. 'GREEN COLLAR' JOBS WHEN THE U.S. DOLLAR GAINS STRENGTH AGAINST THE EURO?? OR HAVE THEY ANTICIPATED and STRATEGIZED HOW TO EXPLOIT FOREIGN CURRENCY/EXCHANGE MARKETS TO ENSURE (HEDGE) AGAINST SUCH AN OUTCOME?? ]
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http://www.iht.com/articles/ap/2007/05/01/business/NA-FEA-FIN-US-Wind-Crossing-the-Atlantic.php
European wind power companies growing in U.S. through acquisitions, expansion
The Associated PressPublished: April 30, 2007
WASHINGTON: New worries about the environment, technology advances and tax break extensions are empowering European wind energy companies to try their luck in the United States.
The U.S. has led the world in installing new wind turbines for the past two years, but it still ranks behind Germany and slightly below Spain in wind power production, according to the Global Wind Energy Council. Now, America's renewed embrace of policies to encourage energy alternatives have led companies with years of experience in Denmark, Germany and Spain to invest in U.S. shores, challenging both the U.S. market leaders and any environmental opposition to building giant turbines.
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http://74.125.95.104/search?q=cache:eYf0tTOa6YAJ:findarticles.com/p/articles/mi_m0OXD/is_2006_Jan_24/ai_n26734906+Iberdrola+%2B+factories&hl=en&ct=clnk&cd=1&gl=us
Gamesa, Iberdrola to Build Turbine Factories in Portugal
January 24, 2006
Spanish wind turbine manufacturer Gamesa and utility company Iberdrola recently announced plans to build five wind turbine factories in Portugal that will be capable of producing more than 100 turbines annually, with an aggregate capacity of nearly 300 megawatts.
According to Gamesa and Iberdrola, the two companies also plan to submit a bid in response to a wind capacity tender by the Portuguese government. The companies will submit the bid through a consortium that also includes Portuguese concerns Visabeira, Alberto Mesquita, MECI and Galucho.
Gamesa and Iberdrola noted that the planned wind turbine facilities already have an order backlog of eight years. More than half of the turbines produced at the new facilities are expected to be exported. [TO THE UNITED STATES, WE PRESUME??]
Contact: Iberdrola, website http://www.iberdrola.com/ .
(EIN STAFF: 1/18)
COPYRIGHT 2006 BCC ResearchCOPYRIGHT 2008 Gale, Cengage Learning
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