February 19, 2014 / 4:31 PM / in 4 years

UPDATE 1-EDF to sell 70 pct of Italian wind power assets -sources

* Deal expected to complete in coming weeks - sources

* F2i, First Reserve, Terra Firma interested - sources

* EDF has about 600 MW of Italian wind power capacity

* Erg bought wind assets last year for 1.35 mln euros per MW (Adds source comments, background)

By Stephen Jewkes and Giancarlo Navach

MILAN, Feb 19 (Reuters) - France’s EDF is seeking to sell 70 percent of Italian unit Edison’s wind farm operations as it looks to bring on board a financial partner to help to fund expansion, three sources close to the matter said on Wednesday.

Edison, Italy’s second-biggest utility with large power generation and natural gas portfolios, has about 600 megawatts of wind power capacity, but the Italian market for renewable energy is fragmented and analysts believe that consolidation by bigger players is on the cards.

“Edison will hang on to around 30 percent of the business and lead operations,” one of the sources said.

Erg became Italy’s biggest player in renewables last year when it bought 80 percent of IP Maestrale from GDF Suez in a deal worth 859 million euros, or 1.35 million euros per megawatt. IP Maestrale had installed capacity of 636 megawatts from wind farms.

One banker estimated that 1 MW of wind capacity in Italy would fetch about 1.6 million euros on average, with factors including subsidies and initial investment levels affecting the actual price EDF might receive.

“Offers are expected by the end of the month and the deal should be completed by end-April,” a second source said. The first source said the deal should close “soon”.

Two of the sources said that Italian infrastructure fund F2i and Britain’s Terra Firma, which in 2011 bought solar power assets from grid operator Terna, were interested in buying stakes, while one of the sources said that U.S. private equity fund First Reserve was also in the reckoning.

EDF, F2i and Terra Firma all declined to comment. First Reserve was not immediately available for a comment.

Italy cut back state support to green energy sources last year but buying plants that are already in operation can still give access to generous subsidies.

Under Italian law, power produced from renewable energy has dispatching priority to the national grid.

A third source said the sale of the Edison assets would act as a benchmark for sales of other green businesses.

Sorgenia, the loss-making energy unit of holding company CIR , is about to sell its renewable energy business to cut debt.

Editing by Danilo Masoni and David Goodman

Our Standards:The Thomson Reuters Trust Principles.
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