18 July 2008 – According to several media reports, Scottish & Southern Energy (SSE) of the UK is in the process of lining up a bid to purchase Irish energy supplier Energia, a branch of Viridian Energy, from private equity firm Arcapita.
The UK energy supplier SSE already has a small presence in Ireland, and this acquisition would be an easy way of gaining market share than organic growth.
Arcapita is inviting bids for the Energia business, and it is likely that many European utilities will be interested in acquiring the emerging supplier.
Although Energia has a relatively small generation and customer base by European standards, such an acquisition would provide a number of synergies to SSE, including the addition of Energia’s assets to its current Irish brand, Airtricity.
Airtricity has a wind generation portfolio and around 30 000 customers, making it a similar size to Energia.
SSE does have an advantage over other potential suitors because of the Scotland-Northern Ireland inter-connector. This link provides an easy transportation route from SSE’s main generation sources in the Scottish highlands to customers in Ireland, and will also facilitate the export of generation from Ireland into the UK market.
What is not clear, however, is how SSE will secure funding for the acquisition. In the current climate of limited credit availability SSE’s size may make raising capital problematic.
In addition, SSE may also need to keep an eye on its own future. Speculation has emerged regarding a possible move for SSE by Swedish utility Vattenfall, which may be looking to expand its European base to keep up with its big German counterparts, RWE and E.ON.