Airtricity plans €800m investment

Irish energy group Airtricity plans to invest €800 million in building wind farms in Portugal that will produce enough electricity to power up to 360,000 homes.

The company said yesterday that it intends joining forces with Portuguese operator, Enerbaca-Energias Renovaveis, to build wind farms with a total capacity to generate between 400mw and 600mw of electricity. The company says this is enough to power 190,000-360,000 homes.

The farms will cost a total of €800 million to develop. Around €200 million of this will be spent on site development and general infrastructure, and the remaining €600 million will go on the wind turbines themselves.

The money will be a mixture of bank loans and equity contributions from Airtricity.

The Irish group will have 90 per cent of the local company that will develop the farms, Airtricity Energias Renovaveis SA, and will be responsible for the bulk of the investment. Enerbaca-Energais will have 10 per cent.

Dermot O'Kane, Airtricity's head of new markets, said the group decided to work with a local partner because it needed access to planning expertise and knowledge of the Portuguese market.

"There are lots of issues that come up in terms of dealing with the local authorities and in terms of doing business in Portugal," he said. "We don't have the expertise to deal with that, but they do."

The move to Portugal is partly designed to cash in on its government subsidies for alternative energy.

According to Mr O'Kane these amount to a guaranteed €78 per mw, compared with the €57 offered by the Irish Government.

Under most support schemes for electricity generated from renewable energy, governments pay a guaranteed sum for power supplied to their national grids. This helps to underwrite the viability of the individual projects.

Mr O'Kane said that EU governments tend to pay between €70 and €90 per mw. "It's far better than what's available in Ireland," he said. The company recently criticised the Government for failing to give adequate support to wind and other renewables.

Commenting on the deal yesterday, Airtricity chief executive, Eddie O'Connor, said the Portuguese government had "created an environment where renewable energy companies and Enerbaca-Energias Renovaveis can flourish".

Airtricity is involved in a range of offshore wind projects across Europe. The Portuguese development will be its first on land. The first turbines are expected to be up and running by 2009. The Irish company has a presence in the North Sea, Germany, the UK and the US, where it recently announced it was investing in a €1.1 billion wind farm in Texas.

Enerbaca-Energias Renovaveis began trading in Portugal 2001. Its partners have more than 20 years experience in the energy business.

It also built the Republic's biggest wind farm off the Wicklow coast.