Rising demand for environmentally friendly investments is focusing attention on Spain’s under-exploited solar and more established wind sector
MADRID/LONDON: Several Spanish clean energy companies are planning stock market listings or stake sales within the next two years, taking advantage of a market boom in green assets to raise funds to build more wind farms and solar parks.
Rising demand for environmentally friendly investments is focusing attention on Spain’s under-exploited solar and more established wind sector, helped by government targets in line with international requirements to decarbonise economies and stem climate change.
International groups Acciona and Repsol have started the process of spinning off energy units that could be valued in the billions of euros. Acciona plans a listing and Repsol has given itself 1-1/2 years for an IPO or stake sale to a partner.
Madrid plans to preside over a tripling of its installed solar power generation and a boost to wind which will add 60 gigawatts (GW) in new capacity this decade.
The European Union as a whole wants to reduce its planet-warming emissions to net zero – no more than can be absorbed by carbon-sucking trees or other technology – by 2050.
Iberdrola, Spain’s biggest power firm, will plough some of its 150 billion-euro investment plan for the next decade into tripling its renewable capacity worldwide.
With sunny Spain at the forefront of Europe’s shift to renewables, many clean power developers there are hiring banks to evaluate whether to sell shares to private bidders or on stock markets, financial sources say.
Newer firms Capital Energy and Opdenergy have joined the queue looking for ways to raise funds, according to bankers familiar with those situations.
Capital Energy has hired Goldman Sachs and UBS to advise it on a potential share sale, while Opdenergy has taken on Santander and Citi, people familiar with the matter said. A spokesman for Capital Energy said the company was analysing several financing options. Opdenergy declined to comment.
“Renewables is a sector with … high growth, high visibility and unlike many other growth sectors – these companies are already making a profit,” said Philip ten Bosch, co-head of global power investment banking at Citi.
He added that valuations for pure play clean energy firms are at a clear premium to more diversified utilities, providing the rationale for a spin-offs, though he declined to discuss specific names.
Record levels of money has built up in funds that require strong environmental, social and governance (ESG) credentials, stoking demand for green stocks.
But government bond yields have risen in recent weeks, taking some steam out of growth stocks like renewables, and bankers said this has muddied the investment case slightly, though demand for ESG remains strong.
“Those who have the best assets and the best strategy will have more options but some look opportunistic,” said one banker involved in some of these situations.
S&P Global’s Clean Energy Index has fallen 8% so far this year, although it has held on to 94% growth over the past 12 months, in spite of pandemic-induced recession. GRAPHIC 1
SPAIN’S SOLAR SURGE
Going green is a global trend, but Spain stands out for fast growth partly motivated by a sharp fall in the price of solar panel technology that has helped erase the memory of painful subsidy cuts in 2013.
Madrid plans to preside over the installation of more than 39 gigawatts (GW) of solar photovoltaic technology by 2030, more than triple its current fleet.
And financial investors are now so keen for a ray of sunshine that they are buying into projects before they are built, said Peter Dickson, partner and technical director at London-based investment fund Glenmont Partners.
“An infrastructure investor will normally try not to take too much development risk,” Dickson said.
But this has changed as the market became more competitive, he said.
Strong financial backing has become more important for developers, said Tomas Garcia, Senior Director of Energy and Infrastructure Advisory at Jones Lang LaSalle.
“Development is becoming more capital intensive and more sophisticated, so some smaller developers will need to get that capital and a more professional approach from an international investment fund, for example.” (Editing by David Evans)