Today it was announced that Portuguese oil and gas company Galp Energia will buy solar power projects from Spain’s ACS in a deal analysts say will make it one of the “leading” solar power producers among the oil majors diversifying into cleaner technologies. The deal envisages total spending of 2.2 billion euros in the next four years, making Galp the leading solar power producer in Iberia.
Galp has agreed to buy a mixture of schemes that are already producing electricity and others that are in development from the Spanish construction group. Total generating capacity will reach 2.9 gigawatts by 2023, enough to power 1.8m homes. The deal is the latest example of oil and gas groups diversifying into low-carbon technologies, although environmentalists argue they are still ploughing the majority of their investments into damaging fossil fuel projects.
In a statement on Wednesday it said it would pay ACS 450 million euros when the deal for a total of 2.9 gigawatts of capacity, most of it yet to be built, is closed, and assume 430 million euros worth of project finance debt.
Although small compared with other European oil majors, Galp is a household name in Spain and Portugal with one of the largest networks of petrol forecourts. It said the ACS deal was part of a strategy to divert about 40 per cent of its investment budget to “business opportunities related to the energy transition”.
“This is a major step in our commitment to move towards a low-carbon economy,” said Carlos Gomes da Silva, chief executive of Galp. Analysts have said the acquisition would in “one swoop” catapult Galp to “one of the leading solar power producers amongst integrated oils [companies]”. They added that Galp previously had “limited presence” in the renewables industry.
Galp said it would pay €450m upon completion of the deal, which is expected in the second quarter of the year, and would at the same time take on debt of €430m for the solar parks already in operation. Roughly €1.3bn would need to be invested in the other solar projects by 2023 giving a total value to the deal of €2.2bn.
Biraj Borkhataria, analyst at Royal Bank of Canada, said the Iberian Peninsula was “one of the most competitive regions” in the renewables industry and diversifying into solar projects in Spain was “likely to be negative for Galp’s returns and free cash flow”.
CEO Carlos Gomes da Silva argued that the deal reflected a “discliplined” decision which was in line with the company’s guidelines of allocating 10% to 15% of future investments to renewables and new businesses.
Today it was announced that Portuguese oil and gas company Galp Energia will buy solar power projects from Spain’s ACS in a deal analysts say will make it one of the “leading” solar power producers among the oil majors diversifying into cleaner technologies. The deal envisages total spending of 2.2 billion euros in the next four years, making Galp the leading solar power producer in Iberia.
Galp has agreed to buy a mixture of schemes that are already producing electricity and others that are in development from the Spanish construction group. Total generating capacity will reach 2.9 gigawatts by 2023, enough to power 1.8m homes. The deal is the latest example of oil and gas groups diversifying into low-carbon technologies, although environmentalists argue they are still ploughing the majority of their investments into damaging fossil fuel projects.
In a statement on Wednesday it said it would pay ACS 450 million euros when the deal for a total of 2.9 gigawatts of capacity, most of it yet to be built, is closed, and assume 430 million euros worth of project finance debt.
Although small compared with other European oil majors, Galp is a household name in Spain and Portugal with one of the largest networks of petrol forecourts. It said the ACS deal was part of a strategy to divert about 40 per cent of its investment budget to “business opportunities related to the energy transition”.
“This is a major step in our commitment to move towards a low-carbon economy,” said Carlos Gomes da Silva, chief executive of Galp. Analysts have said the acquisition would in “one swoop” catapult Galp to “one of the leading solar power producers amongst integrated oils [companies]”. They added that Galp previously had “limited presence” in the renewables industry.
Galp said it would pay €450m upon completion of the deal, which is expected in the second quarter of the year, and would at the same time take on debt of €430m for the solar parks already in operation. Roughly €1.3bn would need to be invested in the other solar projects by 2023 giving a total value to the deal of €2.2bn.
Biraj Borkhataria, analyst at Royal Bank of Canada, said the Iberian Peninsula was “one of the most competitive regions” in the renewables industry and diversifying into solar projects in Spain was “likely to be negative for Galp’s returns and free cash flow”.
CEO Carlos Gomes da Silva argued that the deal reflected a “discliplined” decision which was in line with the company’s guidelines of allocating 10% to 15% of future investments to renewables and new businesses.
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