Enel Green Power looks to Asia for next phase of growth

Reuters News
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Posted: Apr 08, 2015 12:21 PM

By Stephen Jewkes

MILAN (Reuters) - Enel Green Power (EGP) is stepping up its expansion in Africa and will turn to Asia next as it chases growing energy demand in emerging economies, the head of Italy's biggest renewable energy company told Reuters.

In recent years EGP, controlled by Europe's No. 2 utility Enel, has invested heavily in Latin America, shifting its focus from mature European markets to fast-growing emerging markets with clear regulations and abundant natural resources.

But while it channeled around 80 percent of spending into North and South America in 2014, that number could change significantly in coming years as it targets new growth regions.

"Asia is the next step for us," Francesco Venturini told Reuters, without providing figures on future investments.

Clean energy is grabbing the attention of utilities worldwide as governments, especially in emerging economies, seek to cut reliance on polluting fossil fuels and take advantage of cheaper green solutions and falling costs.

But some analysts are concerned that with commodity prices falling and increased competition, margins on new renewable investments could be lower than expected.

"About a year ago we sent our business development teams working in Africa to Asia, which is richer and more developed but with a far larger consumer base," Venturini said.

EGP estimates that 1.5 billion people in Africa, Latin America and Asia will gain access to electricity by 2030.

Earlier this month, EGP agreed with Japan's Marubeni Corporation  to assess green opportunities in Asia and the Pacific.

The company is looking at India, Thailand, Malaysia, Indonesia, and the Philippines, Venturini said.

China is not on the group's radar screen, however. "It's not an easy market to penetrate and is dominated by local players with heavy subsidies. This is not our strategy," he said.

SCHOOLS IN AFRICA

EGP, one of the world's biggest green energy producers with 9,600 megawatts (MW) of installed capacity, has few megawatts in Africa but there are 500 more under construction and 4,500 MW in the pipeline.

The company works in South Africa, Egypt, Kenya, Morocco and Namibia. "We're interested in other countries and are trying to find the best business model," Venturini said.

Renewable energy plants are not able to provide the amount of power that big thermoelectric stations generate. But they are cheaper to build and can be spread more widely in countries where high-voltage power grids are often underdeveloped.

"Maybe we can do the same thing mobile telephony did for communications, using small plants and batteries," Venturini said.

In South Africa, EGP has opened a green energy school, the EGP Academy, to train local people to install solar panels.

The aim is to build a specialized workforce able to replace workers from outside and so cut costs while training businessmen who could also help EGP roll out a retail business in the country.

"This can become an important form of business and one we can replicate elsewhere," Venturini said.

(Editing by Mark Potter)