1 October 2002 – Spain’s second largest utility Iberdrola said yesterday it planned to form a strategic alliance with Gamesa, the world’s fourth largest wind turbine manufacturer.

As part of the arrangement, IbeRenova, the renewable energy subsidiary of Iberdrola has bought the assets put up for sale by Gamesa. IbeRenova has paid a ?1.1bn ($1.08bn) for the 1100 MW of wind farm assets in Spain, Portugal and Italy.

An initial payment of ?693m will pay for wind farms with a generation capacity of up to 666 MW by the end of this year and will cover part of Gamesa’s debt repayment. A further instalment of between ?337m and ?376m will go towards acquiring wind generation projects, all of which are expected to be operational by 2006.

Iberdrola is to take a 60 per cent stake in two joint ventures being created to manage wind parks under construction in Spain and potential projects in Europe.

The agreement increases Iberdrola’s wind energy output to 1920 MW at the end of the year and 3030 MW by the end of 2003. The company, which has established a target of 3080 MW for 2006, said that by the end of this year 56 per cent of its production capacity would be from renewable energy sources and 80 per cent would be from harmful carbon dioxide emissions.

Iberdrola is an indirect shareholder of Gamesa through its 50 per cent stake in an industrial venture with Banco Bilbao Vizcaya Argentaria that owns 37.8 per cent of the engineering company.