(Updates with Romania reaction, analyst)
By Jana Mlcochova
PRAGUE, Aug 27 (Reuters) - Czech power group CEZ plans to
build a 1.1 billion euro ($1.62 billion) wind park in Romania,
the largest of its kind in Europe, in a move to offset emissions
from dirtier coal-fired power plants.
CEZ said the two-stage, 600 megawatt project would be built
17 km (10 miles) from the Black Sea shore, north of the port of
Constanta, and would be around twice the size of the next
biggest onshore wind farm in Europe.
Just over half the wind park would come on line in 2009 and
the rest a year later, CEZ said.
The project will be one of the largest new foreign
investments in European Union newcomer Romania, and signals a
vote of confidence in its cash-hungry economy which grapples
with poor infrastructure and incompetent administration.
The Romanian leu currency rose 0.2 percent to 3.54 per euro
<EURRON=> after the CEZ announcement.
"It is good that foreign direct investment grows," said
Ciprian Dascalu, economist at Millennium Bank. "The gap between
us and the EU is big so there is plenty of room for investment.
In the long term, it will benefit the economy and the currency."
Romania, which needs foreign cash to finance modernisation
and to plug a vast current account deficit, attracted foreign
direct investment (FDI) worth 4.8 billion euros in the first
half of 2008. Last week, the finance minister said the figure
could top 10 billion this year.
CEZ said it bought the investment plans, which include
pre-approved permissions and contracts, from renewable power
developer Continental Wind Partners. They will include two
adjacent farms in the towns of Fontanele and Cogealac.
CEZ, central Europe's largest listed company, aims to boost
spending on renewable energy due to an EU climate package
proposal expected to push up costs for production from fossil
fuels starting in 2013.
"Investment into renewables is one of the strategic measures
we are taking to respond to the adopted energy-climactic package
of the EU," CEZ Chairman Martin Roman said in a statement.
Roman added that CEZ would also extend power production from
gas and nuclear plants as a way to meet CO2 emission targets.
CEZ shares were 1.06 percent lower at 1,226.80 crowns at
0745 GMT, underperforming Prague's main PX index, which was up
0.12 percent.
PUSH TO WIND
Eastern Europe, which relies mainly on coal and nuclear
energy for its electricity production, is lagging behind its
western neighbours on meeting the EU's renewable energy goals.
The bloc wants 20 percent of energy demand to be sourced
from renewables such as solar, wind, wave, hydro and biomass by
2020, versus 8.5 percent now.
The region also wants to reduce dependency on gas imports
from Russia, especially following Moscow's conflict with Georgia
this month and Russia's sharp opposition to plans by the Czechs
and Poles to host a U.S. missile shield.
Poland, the Czech Republic and Bulgaria had the biggest wind
energy capacity of all EU east European nations with 276, 116
and 70 MW, respectively, at the end of 2007, EWEA data showed.
This compared with over 22,000 MW for Germany and more than
15,000 MW for Spain, which are European and world leaders in
wind energy.
The project is CEZ's biggest foray into wind energy
production and a push away from its coal- and nuclear-heavy
portfolio. Of the 32.2 TWh it produced in the first half of
2008, 54 percent was from coal and 43 percent was from nuclear
plants.
The project is also greatly encouraged by Romania, which
experts say has a sound mix of coal, nuclear and hydro power,
but seeks to boost renewable energy.
"There has been growing interest from investors to build
wind power plants in Romania over the last year," Romania's
finance and economy ministry said. "The investment announced by
CEZ is the most important one in the field so far."
CEZ has some 80 wind farms in the Czech Republic at various
stage of completion, with a total capacity of 150-220 MW, and
the company plans to have 1,000 MW installed capacity in wind
farms by 2020.
(Additional Reporting by Gerrard Wynn, Anna Mudeva, Jason Hovet
and Luiza Ilie; Writing by Michael Winfrey; Editing by Rory
Channing)
