Enel poised to create southern European renewables powerhouse

Italian energy giant Enel is reportedly on the verge of beefing up its renewable energy division in a deal that would merge its Spanish assets with its existing Green Power unit.

Reuters reported last week that the company, which is fast emerging as one of the leading players in southern Europe's booming solar energy market, is in talks with its 92 per cent-owned Spanish venture Endesa SA about integrating the unit with its existing renewable energy operations in Italy.

Enel currently boasts a sizable foothold in the Spanish market with Endesa generating 2.7GW of renewable capacity and having a 50 per cent stake in a separate joint venture with Gas Natural known as Eufer.

"The idea is to set up a joint venture that is majority-owned by Enel and into which Endesa would place its renewable assets in Spain, while Enel would place its Eufer assets," a source close to the talks told the news agency. "EGP [Enel Green Power] would eventually take ownership of the Enel share in the joint venture, which could be around 60 per cent."

Sources also told Reuters that Enel was in talks with Gas Natural to break up Eufer.

Experts said any merger would help Enel pave the way for the planned sale of a minority stake in its EGP unit, which is expected later this year and is designed to help ease the company's €51bn debt mountain.