Italy renewable shares boosted by nuclear vote

Reuters News
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Posted: Jun 14, 2011 12:19 AM
Italy renewable shares boosted by nuclear vote

MILAN (Reuters) - Shares of Italian renewable energy companies rose on Monday as a vote against the reintroduction of nuclear power generation in Italy grew increasingly likely.

"I think most of the shortfall in power supply (from the lack of nuclear) will come from more gas but for sure there'll be more renewables," UniCredit analyst Javier Suarez said.

The Italian government planned to get 25 percent of its energy mix from nuclear power by 2020 and 25 percent from renewables.

"We must probably say goodbye to the possibility of nuclear power stations and we must strongly commit ourselves to renewable energy," premier Silvio Berlusconi said on Monday.

At 1341 GMT, Enel Green Power, Italy's biggest renewable company, was up 2.9 percent and K.R.Energy was up 14 percent. Kerself was up 11.6 percent, Pramac up 11.5 percent and Ergycap up 12 percent.

Italy, heavily dependent on imports for its energy needs, banned nuclear power generation in 1987 after the Chernobyl accident the previous year.

Italy's biggest utility, Enel, has plans to start building nuclear power stations in the country together with French power giant EDF, but has invested very little.

WATER INVESTMENTS AT RISK

Shares in Italian utilities with water businesses came under pressure on Monday as investors worried the fallout from two referendums could impact future investments and earnings.

The referendums could revoke laws that seek to push water distribution toward greater competition and allow a return on capital invested.

"We would expect the 'yes' win to create room for further weakness of Acea, Hera and Iren shares," Italian broker Mediobanca said on Monday.

The government says privatization is essential to finance better services. Opponents say it would lead to higher prices.

At 1341 GMT Acea shares were down 1.3 percent, Hera shares were down 0.19 percent and Iren shares were up 0.08 percent.

UniCredit estimates the water business generates 52 percent of 2011 core earnings for Acea, 23 percent for Hera and 19 percent for Iren.

"This (abolishing return on capital) would open up a possible long and dangerous period of uncertainty during which... we would expect companies to block their already approved investment plans," Mediobanca said.

(Reporting by Stephen Jewkes; Editing by David Cowell)