State power firm snapping up grids across Europe
Company's low-key approach welcomed in a sector wary of overseas investment, analysts say
The European Commission has long wanted the continent's power grids to work in unison for reasons of efficiency and to have secure supplies, so far to little avail.
While Europe's utilities have met hostility to cross-border forays and been outbid by infrastructure funds, State Grid, the world's largest utility by revenues, with its deep pockets and reputation for hands-off management, has had an easier ride, buying minority stakes in Portuguese and Italian grid operators and also pursuing designs on Greece and Spain.
If all goes to plan, it would become the first utility to build a major regional electricity grid portfolio, a feat that the commission had hoped Europe's big grid operators would have achieved in the five years since it forced the separation of the grids from power production to increase market competition.
A State Grid official familiar with its overseas strategy said projects abroad typically yielded high single-digit to double-digit returns, compared with low single digits at home.
Its relatively low yield requirements gave it an edge over Western infrastructure funds and European sector peers. State Grid bought 25 per cent of Portuguese grid operator REN in 2012 and last month it entered Italy with a deal to buy 35 per cent of CDP Reti for at least €2.1 billion (HK$21.8 billion).