* E.ON expects profits in renewable energy business to rise
* Banks on partners in onshore wind park expansion
* Says to expand in U.S., Europe; looking at new markets
* E.ON has 10,900 MW of renewable capacity, 17 pct of total
(Recasts, adds quotes, background)
By Christoph Steitz
BERLIN, Aug 26 E.ON, Germany's
biggest utility, is banking on investors to help it catch up
with European rivals in renewable power, unable to shoulder
large projects on its own as it battles to cut debt.
E.ON's conventional coal and gas power plants have been hit
hard, in part because of a massive surge in renewable energy
generation in Europe which industry experts say was ignored by
German utilities for too long.
The group's board member in charge of renewables told
Reuters green energy was now growing as a source of profits for
the utility, but that it needed help from investors for large
wind power projects as its own investments were being cut to
tackle its 29.7 billion euros ($39.2 billion) of debt.
"We have a big pipeline of developed onshore (wind)
projects. But E.ON can no longer meet the capital needs for
these projects on its own," Mike Winkel said in an interview.
"Therefore, financial investors are very welcome to join and
it turns out they see this market as being quite attractive."
Drawn by annual returns of up to 20 percent, pension and
infrastructure funds have started to buy into large wind parks
as an asset class.
Last month, Denmark's DONG Energy A/S agreed to
divest 50 percent of a German offshore wind farm project to a
group of Danish pension funds, freeing up capital to expand its
offshore wind business.
E.ON could do with the help, as it expects annual capital
expenditure to halve to about 4 billion euros in 2016 from more
than 8 billion last year.
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E.ON's smaller German peer RWE has also said it
needs the help of external investors for big wind power
projects, which swallow investments of at least 1 billion euros
and carry greater risks when erected offshore.
Winkel said the growing role of renewables was partly down
to shrinking profits from conventional power generation.
"Generation from renewable energy sources grows as
conventional generation continues to fall - we're witnessing our
own energy transformation," he said.
Last year, renewables accounted for just over 15 percent of
E.ON's earnings before interest, tax, depreciation and
amortisation (EBITDA), which fell by 14 percent overall.
That put it far ahead of local rival RWE, where renewables
accounted for just 4.5 percent of core profit.
But it still lagged Spain's Iberdrola, which made
more than a fifth of its EBITDA from renewable energy last year.
E.ON has focused on wind and has become the world's
third-biggest owner of offshore wind capacity, behind Denmark's
DONG and Sweden's Vattenfall.
Since 2007, it has invested about 10 billion euros in
renewables. Including hydro power, E.ON has about 10,900
megawatt (MW) of renewable capacity worldwide, accounting for
about 17 percent of its total generation portfolio.
For now, however, most of its wind parks are in the United
States and Britain, where the pressure on conventional power
sources is less intense than in Germany.
Winkel said E.ON aimed to further expand its renewables
presence in Europe and the United States, and is also working on
onshore wind parks in Turkey.
(1 US dollar = 0.7577 euro)
(Additional reporting by Tom Kaeckenhoff; Editing by Tom
Pfeiffer and Mark Potter)