EWE takes next step towards forging German renewables champion

FRANKFURT/DUESSELDORF, Jan 7 (Reuters) - German utility EWE (LANDWE.UL) will favour expansion over payouts in its planned renewable power joint venture with the owners of wind turbine maker Enercon, its chief executive said.

The companies signed a deal just before Christmas to form Germany's largest onshore wind park operator, a direct challenger to larger utilities RWE (RWEG.DE) and EnBW (EBKG.DE), as well as to renewable firms wpd and Energiekontor (EKTG.DE).

The joint venture, which is expected to get antitrust approval in the next two to three months, plans to invest about 4 billion euros ($4.9 billion) by 2030 to more than double onshore wind power capacity to as much as 5 gigawatts (GW).

"Most of the planned investments will be funded through cash flow," Stefan Dohler told Reuters. "Most of the profits will likely be spent on expansion, so payouts will be kept moderate."

The joint venture between EWE and the Aloys Wobben foundation has a wind project pipeline of more than 9.4 GW. Dohler said the company was not restricted to wind technology and could also choose to pursue large-scale solar power parks.

Based on current industry multiples, the entity's enterprise value could be around 4.5 billion euros, boosted by a major rise in renewable assets over the past 12 months.

"With regard to balance sheet, this is a substantial growth case due to the large portfolio. You could call it a transformational shift," Dohler said.

Amassing renewable capacity has been high on the agenda of large corporations, including oil majors that have been desperate for new revenue streams as their old business model comes under pressure from a global move away from fossil fuels.

Despite the steep valuations, Dohler said that an initial public offering was not on the agenda for the joint venture.

"We ourselves want to realise the potential."

($1 = 0.8150 euros)

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