Spanish utility Endesa is looking to sell a minority stake in a 2GW renewable energy portfolio to raise funds for new projects. Petrobras, Brazil’s state-run oil company, unveiled plans to become the country’s largest wind developer through offshore wind projects and partnerships, as part of its strategy to reduce emissions and invest in green energy.

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News Flash September 25

Allen Hall: I’m Allen Hall, president of Weather Guard Lightning Tech, and I’m here with the founder and CEO of IntelStor, Phil Totaro, and the Chief Commercial Officer for Weather Guard Lightning Tech, Joel Saxum. And this is your News Flash.

Spanish utility Endesa is looking to sell a minority stake in a two gigawatt renewables portfolio. Endesa is open to selling up to 49 percent stake in the portfolio, which consists mainly of solar photovoltaic assets, including projects in development and assets in operation with some power purchase agreements.

The estimated value of the portfolio is around $2. 14 billion, as per initial valuations by the banks. The company currently has about 10 gigawatts of installed renewable energy capacity in mainland Spain. Phil, this is a huge deal. It seems like Indus and a number of other companies are selling a minority stake in their existing assets to help fund the next generation of renewables.

Phil Totaro: Exactly. So this actually follows moves by Iberdrola Greenergy, and Repsol in the past, you know, 8 or 12 months or so, to also sell off some minority stakes. It’s, it’s important to note that what, what Indese is doing, and this, keep in mind, this is the Spanish arm of utility company Enel Italian utility company Enel so what they’re doing in Spain is, I think, just trying to free up some cash for reinvesting in new greenfield sites, and keep in mind that they’re going to start building new or repowering some of the wind and solar sites that they have in Spain within the next five years.

And I think that they want to start freeing up some, some cash to be able to do that. Phil, I want to ask 

Joel Saxum: you a question about this one. Do you think that some of this has to do with, with rising? Interest rates globally as well, because if these assets are, are financed, is it like, hey, man, we’re tired of paying these six and seven percent or whatever the interest rates may be on some of these notes.

They think you want to get out from underneath those interest payments a little bit. You think that 

Phil Totaro: could be a part of it? Potentially, it depends on what they negotiate in terms of the debt financing. It’s… unclear if this is necessarily a direct relation to interest rates, but that has more to do with investing in a new project than necessarily selling off an old one.

Usually companies sell off an old asset to free up capital. 

Allen Hall: Petrobras, Brazil’s state run oil company, is set to unveil new initiatives to become the country’s largest wind energy developer. The company aims to be a significant player also in hydrogen carbon capture with a focus on reducing emissions from its product portfolio.

Petrobras also plans investments in green electrons and molecules, emphasizing environmentally friendly power generation and storage with minimal emissions. to take a major oil Company like Petrobras that is changing its tune and is going heavily into renewables is a massive shift for Brazil.

Phil Totaro: Absolutely. What’s interesting about all this is so first thing is they’ve now proposed more offshore wind projects to the local permitting authority, Obama than any other company in, in the country. And it’s about 23 gigawatts worth of, of project sites. That you know, that alone, if they built it, would, would be a significant amount of the the power required.

I think Brazil is only behind China at this point in offshore wind proposals. I think it’s now getting close to 200 gigawatts. I think we’re just under about 200 gigawatts worth of proposed project sites in, in the country. The other aspect of this that was really interesting is that they are going to form an alliance with Total Energies and Brazilian wind and solar development company Casa dos Ventos which Casa dos Ventos is the biggest developer of, of onshore wind and solar PV in in the country.

And it potentially leads Petrobras down a path where they could even acquire Casa Dos Ventos at some point in the future. The third aspect of this that came out with Petrobras ambitions is that they’re also going to be partnering with domestic wind turbine manufacturing company WEG. To actually build the seven megawatt onshore wind turbine that WEG has designed.

You know, WEG has ambitions and being backed up by the biggest energy company in the entire country of Brazil is an important an important step in this process. So, Petrobras making huge strides in Demonstrating their, their seriousness. 

Joel Saxum: Yeah. And, and down there in South America, no better company than Petrobras to be going offshore, right?

They’ve been in the offshore oil and gas world for a long time. Playing in, they, they know the territory, they know the sea states, they know the technology, they know the supply chain, they know how to get things done offshore. So bringing in or, or partnering up with Casados Ventos helps in that respect as 

Allen Hall: well.

Where are they getting the cash flow to do this?

Phil Totaro: Oil and gas. I mean, they’re making, everybody’s making money in oil and gas right now. That’s why, I mean, Shell is… Shell was going to be one of the biggest solar PV companies in Brazil. They pulled out because they were making so much money from oil and gas in Brazil.

Allen Hall: If you want to learn more about mergers, acquisitions, and partnerships in wind industry, check out our friends at IntelStor at intelstor.com.