* RWE's war chest swells to 7 billion euros
* Small pipeline deals in focus - CFO Krebber
* Asset scarcity to drive up prices
By Christoph Steitz, Tom Käckenhoff and Vera Eckert
FRANKFURT/DUESSELDORF, Aug 19 (Reuters) - Germany's largest
power producer RWE plans to spend part of its 7
billion euro ($8.4 billion) war chest on growing its 24.7
gigawatt pipeline of renewables projects, its CFO said, just
weeks after BP announced a major low-carbon push.
"A pipeline needs to be worked on constantly. It doesn't
grow overnight," Markus Krebber told Reuters, less than a day
after the group raised 2 billion euros ($2.4 billion) in a share
sale to fund growth.
Unfazed by the COVID-19 crisis, Krebber said that the
environment for renewables had improved in the course of the
year, adding RWE would be able to realise more of its current
pipeline of projects than previously thought.
He said the company, Europe's third-largest renewables
player, would expand that offering through smaller deals, below
the 2.7 GW it recently bought from wind turbine maker Nordex
for 402.5 million euros.
"We're not interested in taking over operating assets on a
large scale. Our business model is to develop, build and
operate," Krebber said.
The share sale proceeds come on top of a separate 5 billion
euro spending plan by the end of 2022, intended to grow RWE's
installed renewable capacity to beyond 13 GW from around 9 GW
now.
"We won't be able to spend it all until the end of 2022
because realising projects needs time," Krebber said. RWE will
give new growth targets in the second half of 2021, he said.
The company wants to expand in North America and Europe,
where Krebber aims to add more solar and offshore wind projects
to further bolster its renewables position, which was boosted by
a major asset swap with peer E.ON.
He also said that funds were required for upcoming renewable
energy auctions in Britain, France, Denmark, Germany and North
America, at which project developers have to make competing bids
for capacity.
Shares in RWE, which had hit their highest in more than
eight years on Tuesday, closed 4.6% lower, in line with the
issue price set for the capital increase.
Krebber's comments highlight the ongoing race for renewable
assets, where utilities - most notably Italy's Enel,
Spain's Iberdrola and Denmark's Orsted -
face increasing competition from big oil.
"There's a scarcity of offshore wind projects," said Thomas
Deser, fund manager at Union Investment, a top-20 shareholder of
RWE. "This could even intensify as oil majors such as BP
are entering the renewables sector."
BP earlier this month unveiled plans to expand its renewable
power generation to 50 GW by 2030, compared with 2.5 GW now, and
said it would increase its low-carbon spending to $5 billion a
year by the same point.
"It is difficult to imagine that BP can reach this level
without takeovers," Deser said. Union Investment is also a
top-30 shareholder in BP.
RWE has been called a takeover target by Goldman Sachs. With
a market valuation of 20 billion euros, it is cheaper than Enel
or Iberdrola but still a heavyweight compared with Britain's SSE
or Portugal's EDP Renovaveis.
"I'm not worried about the growing competition. If others
want to join in, it's proof that our sector is attractive,"
Krebber, who will take over as RWE's chief executive next year,
said.
The growing interest is also expected to drive up prices for
project pipelines, already reflected in the share prices of
smaller players, including Encavis, PNE AG
and Energiekontor.
All have risen between 24% and 49% in the year to date.
($1 = 0.8382 euros)
(Editing by Edward Taylor and Jan Harvey)