Italy's ERG pledges 2.1 bln euros to become pure green Reuters
3 minute read
May 14 (Reuters) - Italy's ERG (ERG.MI) pledged on Friday to spend 2.1 billion euros ($2.5 billion) over the next five years to boost its wind and solar power business across Europe and drive earnings.
Italy's biggest wind operator, which generates some 60% of earnings from wind power, said it aimed to add 1.5 gigawatts (GW) of capacity by 2025, boosting its solar business and selling assets to become a purely green player.
"Asset rotation of hydro and thermoelectric plants... would be a chance to speed up further growth and evolution towards a pure wind and solar model," CEO Paolo Luigi Merli said.
In March, sources said ERG had kicked off the sale of hydro- and gas-fired plant assets worth more than 1 billion euros, attracting interest from funds and utilities. read more
The Genoa-based group, controlled by the Garrone family, used to be one of Italy's leading oil refiners before selling out to focus on renewable energy.
ERG, which last year had total installed capacity of 3.1 GW, said it would strengthen its presence in Italy and Europe, expanding into countries, such as Spain and Sweden.
To give earnings more visibility and make it easier to raise debt, the group will make 80% of its business "quasi-regulated" by taking part in capacity auctions and selling production to corporate clients through power purchase agreements (PPA).
Earlier on Friday, it said it had signed a PPA with phone company Telecom Italia (TLIT.MI).
Core earnings will rise to 550 million euros in 2025 from 481 million euros last year, the company said, adding it planned to maintain a steady dividend of 0.75 euros per share.
"The capacity increase is in line with our expectations but the 2025 core earnings target is a bit below," said one Milan-based analyst.
At 1012 GMT ERG shares were down 2.2% after earlier falling as much as 9%.
($1 = 0.8258 euros)
Reporting by Rita Plantera; editing by Stephen Jewkes
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