March 26, 2019 / 4:18 PM / 7 months ago

Ferrovial moves to buy hydro-electric assets in Spain: sources

MADRID (Reuters) - Spanish construction firm Ferrovial has approached U.S.-listed metals group Ferroglobe to discuss a potential bid for its mini hydro-electric power assets, two sources with knowledge of the deal said.

The acquisition would be the Heathrow airport owner’s first step into renewable assets in Spain and could help to recover some of the revenues it will lose when it completes the sale of its services division.

Ferrovial has approached Grupo Villar Mir, the private holding company that owns 53 percent of Ferroglobe, to buy the assets, but will need to secure approval from regional authorities, one source said.

“The negotiations are still at an early stage. It is a politically sensitive deal,” the source said.

Ferroglobe agreed to sell the hydro assets to investment fund Brookfield in 2017 for 255 million euros ($288.41 million), but the deal fell apart when the regional water authority refused to approve it.

A Ferroglobe spokesman said the company was not actively looking for a buyer, but had received several indications of interest in buying hydro power assets in north-western Spain.

Ferrovial declined to comment.

In 2017, the water authority in the Galicia region had ruled that selling the turbines, which are located in rivers, would have put industrial activity and jobs in the region at risk.

Spain’s government has outlined plans to generate all its electricity from renewable sources by 2050, a switch it says will require about 200 billion euros of total investment in the next 10 years.

Despite the possibility of a change in leadership after a general election next month, companies are proceeding on the basis that the transition will happen anyway.

Wind giant Iberdrola plans to spend 4.2 billion euros on renewables in Spain in the next three years, and grid operator Red Electrica plans to invest more than 1.5 billion by 2022 on integrating green energy into the mix.

Mainland Spain generated 13.2 percent of its electricity from hydro power in 2018.

editing by Axel Bugge; editing by David Evans and Ed Osmond

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