Italy’s ERG will spend 2.9 billion euros to increase Europe’s green footprint

Wind turbines are seen along the A2 highway near Salerno, Italy, January 14, 2021. REUTERS/Yara Nardi

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MILAN, March 15 (Reuters) – Italy’s ERG (ERG.MI) will spend 2.9 billion euros ($3.2 billion) over the next five years as it seeks to expand its presence in Europe and increase its profits by nearly doubling its green energy capacity.

In its new plan, Italy’s biggest wind operator said it was targeting around 10 markets across Europe and would generate half of its core revenue abroad by 2026.

It will add 2.2 gigawatts of new capacity over the period to reach 4.6 GW, nearly half of which will come from acquisitions for which it had allocated 1.4 billion euros ($1.5 billion).

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The plan comes as Italy seeks to accelerate the deployment of renewable energy generation to help reduce its dependence on Russian gas.

“The current context of international crisis considerably reinforces the sense of urgency and our personal commitment to help reduce dependence on gas,” said ERG CEO Paolo Merli.

ERG, controlled by the Garrone family, was one of the main Italian oil refiners before turning to renewable energies.

It currently generates most of its generation from wind, but said on Tuesday that a third of new capacity will be solar, while other new business areas like energy storage, floating wind and green hydrogen will be developed.

He said he plans to secure 85-90% of his revenue using tenders and power purchase agreements. The basic result will increase by 40% to 560 million euros.

The Genoa-based group, which raised its dividend to 0.9 euros per share from 0.75 euros, also intends to reinvest money from asset sales to stimulate renewable growth.

It plans to close the sale of a gas-fired power plant in southern Italy in the third quarter of this year to turn it into a pure renewables player.

“Definitely positive indications,” Italian broker Equita said of the group’s results and plan which “provides very strong 2022-2026 targets with an improved dividend throughout the plan period.”

At 11:06 GMT, ERG shares rose 1.5%, outperforming the Italian blue chip index (.FTMIB) which fell 0.8%.

($1 = 0.9098 euros)

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Reporting by Stephen Jewkes; edited by Agnieszka Flak and Keith Weir

Our standards: The Thomson Reuters Trust Principles.

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