EURO COMPANIES SIGN $9.7 BIL WIND DEAL

4500 megawatts. $9.7 billion. The biggest wind deal ever made anywhere in this world. And they will get bigger.

Iberdrola Renovables is incredibly busy scheduling wind development. Before this gigantic deal, it had a 2700-megawatt deal with Gamesa from 2006. This year it has signed deals with GE Energy (300 megawatts), Mitsubishi (300 megawatts), Suzlon Energy Corp. (700 megawatts) and Alstom SA/Ecotecnia (310+ megawatts).

This wind energy boom has all the unrestrained enthusiasm of a bubble but it is driven by real New Energy demand, not irrational exuberance.

What a way to celebrate European Wind Energy Day 2008!

Anticipated world wind capacity growth - a lot to celebrate on European Wind Day 2008. (click to enlarge)

Gamesa, Iberdrola Sign EUR6.3 Billion Wind Power Deal
Bernd Radowitz, June 13, 2008 (Dow Jones Newswires via CNN Money)

WHO
Gamesa SA, Iberdrola Renovables SA (Xabier Viteri Solaun, Chief Executive)

WHAT
In the biggest deal ever made for wind, Gamesa and Iberdrola formed Joint Ventures (JVs), a strategic alliance and Gamesa will provide turbines, installation, grid connection and operational and maintenance services to Iberdrola worth $9.7 billion dollars. In a side deal, Iberdrola bought 940 megawatts of other wind capacity from Gamesa for a trivial EUR65 million ($99.7 million).

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WHEN
- Hardware to be delivered between 2010 and 2012.
- Services will be provided through warranty period to 2012.
- End of 2008, 1Q: Iberdrola Renovables = 8,164 megawatts of New Energy, 7,822 in wind and the balance in small hydroelectric plants.

WHERE
- The installations in the main deal are for Europe, the U.S. and Mexico.
- Both Iberdrola and Gamesa are based in Bilbao, Spain.
- The side deal is for 600 megawatts in the U.K., 300 in Mexico and 40 in the Dominican Republic.
- Agreements and JVs exclude the U.S. and China markets.

WHY
- The deal represents 4,500 megawatts of capacity. It is the biggest single wind energy deal ever.
- Iberdrola is the biggest owner of wind capacity in the world.
- Gamesa is the world’s 3rd biggest wind turbine manufacturer (behind Vestas and GE Energy).
- The deal assures Iberdrola of 70% of its turbine and services supply for the contract period.
- Both companies’ stocks rose after the deal was announced.
- The deal establishes a Spanish JV giving Iberdrola Renovables 77% and Gamesa 23% (with an option to go to 32%) as well as an international JV giving Iberdrola 76% and Gamesa 24%.

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QUOTES
- Xabier Viteri Solaun, Chief Executive, Iberdrola Renovables: "[The deal is a] historic milestone for Iberdrola and the whole renewables industry due to its volume, timing and strategic value…"
- David Garcia, analyst, Bankinter of Madrid: "Securing such a large deal is positive for Gamesa, and good for Iberdrola as it guarantees it supply in a tight market…"
- Gamesa, on the JVs and strategic alliance: "…both companies' competencies in the promotion, development and operation of wind energy projects in Spain and continental Europe will be merged…"
- Iberdrola, on the deals and the JVs: "The operation aims at uniting two world leaders in the sector of the development of wind parks…"