Italian power group Enel said it is considering a possible corporate reorganisation of its renewables assets in Chile.
The overhaul would involve simplifying the ownership structure of the group’s Chilean listed companies, Enel explained in a press statement. It would also include the integration of Chilean renewable assets held by another Enel Group company – Enel Green Power Latin America (EGP) – into Enel Chile.
Enel Green Power has 1.2 GW installed renewables capacity in Chile, making it the largest renewables player in the country. Of that total, 564 MW is wind capacity, 492 MW is solar and 92 MW is hydropower. It has also just started production at the 48-MW Cerro Pabellón project, South America’s first geothermal power plant.
A non-binding reorganisation proposal has been formulated by Enel Chile and was received by Enel in July, the Italian parent company added. It has now begun analysing the proposal, Enel added.
For the merger to go ahead, Enel Chile would have to increase its stake in Enel Generacion Chile to 75% from its current level of 60%, through a partial takeover bid. Such a bid would also require a capital increase, Enel said, although it did not specify how much it might be.
Enel Chile said in a separate statement that the restructuring plan has been conditionally approved by its parent company. The firm originally sent a private proposal to its parent company last month.
For the plan to go ahead, Enel has said it would need to be able to maintain a similar level of shareholder stake in Enel Chile as it has now.
“This operation aims to consolidate the leadership of Enel Chile in the national power generation industry, as the most competitive and diversified company in the market, said Herman Chadwick, president of Enel Chile. “It is a solution that gives the company new opportunities to grow as an operator of non-conventional renewable energy.”
Chile’s renewables market has boomed in recent years, with international developers like SunEdison and SunPower keen to take advantage of the Latin American country’s sunny climate, strong winds and robust economy.
Yet as solar installations have boomed in the ideal conditions of the Atacama, developers without fixed power purchase agreements (PPAs) have struggled as prices on the merchant market have tumbled. The linking of the country’s two discrete grid systems by the end of the year is expected to help increase market access and bolster demand.