Blowing in the wind, an investment opportunity in bleak times

Newsroom 19/10/2009 | 00:00

Wind energy projects and waste management are the two El Dorado areas which could provide business opportunities in Romania, believe market players. Alon Peled, president of Israeli firm Mentor Group Holdings, told Business Review that his company was currently assessing wind energy projects worth hundreds of millions of euros, and could provide several million euros of technology that transforms waste to energy, a program available to municipalities and the medical sector.


Dana Ciuraru

When did you decide to invest in green energy in Romania?

Over the past one and a half years we have started to invest in energy projects in Romania, because until then we were very involved with other investments we had made in the country. One area in which we invested heavily was the real estate sector. For our investments in the energy field we formed Mentor Group Energy as part of Mentor Group Holdings, a consortium of companies based in Romania, but with operations all over Eastern Europe.

Mentor Group Energy has two main areas of interest. One is to develop hundreds of millions of euros worth of wind energy projects, in which Mentor Group Energy will be shareholder. The second is to roll out ecological projects. We have just started the Eco-Verde program, which supports both the public and the private sector in dealing with the problem of waste.


In how many wind projects is Mentor Group Energy involved at the moment?

We have four projects in which we are involved, either in the acquisition process or in a joint venture with other investors. We have projects worth EUR 250-300 million, meaning more than 100 MW. Currently, we are in line for turbines at some German companies. There are no small projects in wind energy, like in real estate. The minimum investment is between EUR 5 million and EUR 6 million, because to make 2-3 MW, every turbine costs between EUR 1 million and EUR 2.5 million, depending on the specifics. What puts us on the map of solid investors is the fact that Mentor Group Energy provides the complete solution, meaning financing as well, in these troubled times.


Where do you get the financing from?

There is a lot of money on the market and there is no problem getting financing. We have agreements with investment funds and banks and we also have access to syndicated loans. Recently, we were in a meeting with a client and he said that banks are not lending money during this period, which is actually wrong. All the banks have money to invest, but they need to have the security that they will get the money back, meaning that every project needs to be realistic. We have unlimited financial resources to put into such projects, if they are feasible. For instance, we have an agreement with a fund which is willing to invest in wind energy in Romania, but only in projects of over EUR 100 million.


What main issues do you face when completing a wind energy project?

Many project owners have approached us and want to be involved in the green energy business. Many of them have a good location, but to make a wind farm from this point is a protracted process and usually they do not even have all the permits from the local authorities. One major problem we have to deal with is that most of the wind energy projects currently on the market are not feasible. There are no more than 15 projects in Romania at the moment. Other key issues are the limited capacity of the grid and the legal issues we have to face. As far as small wind farm projects are concerned, the people with feasible projects don’t usually have any money.


Is waste management a business opportunity in Romania?

We launched the EcoVerde program, which deals with solid waste, one month ago. The municipalities have a huge problem managing large waste capacities. Currently, municipalities are dumping this waste in fields, but this is now forbidden by European las. Through the program we provide special machinery to municipalities which converts waste to energy, thus creating a new source of money for municipalities.


How significant is the investment in this type of technology?

Currently, we are in final stage with five small-medium town halls. For one town hall we will have financial approval very soon and we will be starting negotiations with two big town halls. The cost, giving as an example a town of about 12,000-15,000 people, reaches EUR 7-8 million for the entire technology required to produce energy from waste. There is huge demand for this program. We have also extended this program to the medical and animal fields.

Mentor Group Energy provides up to100 percent financing for whoever is participating in the project, which is one of the main reasons the government is showing so much enthusiasm. Every town hall now wants to get involved in this project and given their balance sheets we can say that in 95 percent of the cases we can grant financing. The decision depends on how keen the town is to participate in the program.

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