Friday, July 06, 2007

Goldman Ride the Wind

Portuguese utility Energias de Portugal’s planned purchase of Horizon Wind Energy LLC from Goldman Sachs Group for more than $2 billion plus debt will bulk up EdP’s power portfolio and tap the rapidly growing U.S. renewable-energy market.

The acquisition will create a global renewable-energy player with more than 3,800 gross megawatts of wind-power generation in operation by the end of 2007, EdP said. The Horizon deal will rank EdP as the world’s 4th-biggest wind-power producer after U.S. company FPL Energy, part of FPL Group Inc. (FPL), and Spanish companies Iberdrola and Acciona, EdP said.

As the U.S. government creates a raft of incentives designed to reduce consumers’ dependence on oil and other energy imports, wind-power investment there has become ever more enticing. The country’s renewable-power capacity is set to rise to 12 gigawatts by the end of the year, according to Ernst & Young. The bank rates the U.S. as the most attractive country for renewable-energy investment.

Goldman Sachs bought Horizon Wind Energy two years ago for less than $1 billion and appears set to make a healthy profit. Widely considered Wall Street’s most environmentally friendly bank, it also helped engineer the TXU deal to satisfy environmentalists — though some shareholders are starting to question whether it’s sacrificing a sliver of its massive profitability to green initiatives, The Wall Street Journal reported today.

In any event, analysts see the purchase as a positive move for EdP. The Portuguese utility “is not getting it cheap, but it’s a fair price,” one Madrid-based analyst said. “EdP is certainly amongst the bigger (renewable-power producers) now. It’s a big acquisition.”

Horizon, which develops, owns and operates wind-power generation, has wind farms in New York, Iowa, Pennsylvania, Washington and Oklahoma. It also has wind-power projects under construction in Minnesota, Oregon, Texas and Illinois.

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