Two Billion Dollar Wind Acquisition: A New Era of Maturity in Renewables?

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Includes: EDP, PBW, PUW
by: Neal Dikeman

The cleantech sector received a huge boost this week from the news that Portugal's
EDP-Energias de Portugal, S.A (EDP) announced the acquisition of Texas based Horizon Wind for a price of over $2 billion. EDP operates globally in Spain, Portugal and Brazil.

One of the intriguing aspects of this deal is the history. Horizon Wind was formerly Zilkha Renewable Energy, before it was purchased by Goldman Sachs (NYSE:GS) in 2005.

According to their websites, Selim and Michael Zilkha were the previous owners of Zilkha Energy, which started in the mid 1980s and grew to be one of the largest privately held independent E&P companies in Texas, before selling it to Sonat in 1998 for $1.04 billion plus debt. Zilkha primarily operated in the shallow water Gulf of Mexico, and was one of the early users of 3D seismic on a large scale.

Starting after that 1998 sale they moved into renewables, and built Zilkha Renewable Energy into a sizeable player in the wind market before selling to Goldman Sachs in 2005. The Zilkhas are now involved in a biomass power business. It is interesting to note that both Zilkha Energy and Zilkha Renewables' claim to fame was having gotten in early and built an aggressive leasehold position. They grew their wind business in many respects like a traditional oil exploration company: build a large lease portfolio first, prioritize your development resources, apply best available technology and build out your infrastructure.

It is also highly instructive to see traditional energy capital plowed into a wind company, only to sell it to a major Wall Street firm, which after additional investment subsequently flipped the business in less than two years to a major European utility. Texas oil money makes good in renewables? No wonder Texas has passed California in wind energy generation. Perhaps we are finally entering a new era of maturity in renewables.

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