Wind and solar powering renewables M&A activity says PricewaterhouseCoopers report

NEW DELHI, 5 February 2009 – Strong mergers and acquisitions (M&A) growth in the wind and solar power sector is adding to renewable energy deal momentum, according to a new analysis of deal-making in the industry published by PricewaterhouseCoopers today. Renewables Deals, is the first edition of an annual review by PwC. According to this review, solar has overtaken hydro as the second largest renewables deal category after wind, accounting for 20% of total renewables deals. 

The impact of the credit crisis was felt in terms of the value of deals dropping, even though the number of deals held up. Some key findings of the report are:


  • A quarter of deals in the power sector are for renewable assets or technology.
  • Renewable energy now accounts for one tenth of M&A value in the wider power sector.
  • In 2007 and 2008, 441 renewables deals were announced with a reported value of US$70.3 billion.
  • Solar deals quadrupled in number and more than quadruped in total value in 2008 over the previous year. Average solar deal size also rose from US$76.7 million in 2007 to US$89.3 million in 2008.

Deal makers

The sale of a 25% stake in EDP Renováeis, the wind power arm of Portuguese power group EDP, to institutional investors headed the list of rewewables deals in 2008. The EDP float raised US$2.8bn.  Scottish & Southern Energy (SSE) was involved in another big deal acquiring Airtricity Holdings in Ireland in a deal worth US$2.1bn, making SSE the largest owner of wind power assets in the UK. The two deals outside Europe in the top ten were both hydro power assets. The importance of players from outside the sector is highlighted by the fact that only 16% of all 2008 renewables purchases were by alternative energy companies themselves.


Deal places

The focus for renewables deals became increasingly concentrated on Europe during 2007 and 2008 with a value of US$17bn, whereas deal value in the rest of the world fell year on year by 63%. North America’s share of worldwide renewables volume held broadly level with just under a quarter of worldwide deal value. Asia Pacific’s year on year deal activity increased from 53 to 64 in 2008. Deal numbers rose everywhere, with the exception of Russia, South America and Africa.

However, deal values are affected by the credit crisis and wider economic downturns. This is seen in half-yearly deal value: the first half year on year deal value was down only 7% (from US$13.9bn to $12.9bn) but the second half deal value shrunk by more than half (from US$29.5bn to US$13.9bn) compared to the previous year.


India perspective

Kameswara Rao, India leader for Energy & Utilities practice, PricewaterhouseCoopers, observes:

“Interest in solar deals is coming not just from within the energy sector. The solar sector is attracting increased interest from wider industrial players seeking an early entry and scaling up of technology. In many cases, current players operating in a small segment of the value chain must grow across the chain to be able to survive global industry trends and generate any meaningful value.

“Across technologies, there is strong interest for manufacturing and technology assets in the renewables sector. In 2008 about 30% of all renewables deals were for such assets (significantly higher than 11% in 2007). In many cases, these are moves by companies seeking to secure an end to end supply chain footprint or to strengthen their local supply base.

“India has recorded total renewable deals of $134 m in 2008, which is about 7.3% of total Asia Pacific renewable deals, and it stands third, behind China and Australia.”

Regarding the prospects for 2009, Kameswara Rao, said:

“2009 will be a watershed year for the renewable energy sector given its sensitivity to subsidy and environmental regulation; the current financial market conditions and the UN Climate Summit in Copenhagen will have a vital bearing on the future prospects. The continuing concerns of energy security and climate change are a driving factor, but falling energy prices and lower carbon prices cast doubt on the viability of some renewable energy schemes. The focus is again on the regulators and governments to further improve the framework for the industry. It is expected that such support will boost technological developments, local manufacture, and economies of scale, and thus drive to reduce long run generation costs.” 


Notes for editors:

Report methodology:

Renewables Deals includes analyses of all global renewable power sector deal activity. We define this as all deals relating to power generation by bio fuels, solar, wind, hydro, tidal/wave and geothermal sources. We include deals relating to manufacturers and developers of renewable technologies (for example, wind turbine manufacturers and solar technology firms), which we identify in a separate ‘technology’ category. We exclude deals relating to nuclear power assets, those centred on energy efficiency, and purchases of development rights.

Analysis encompasses announced deals, including those pending financial and legal closure and those which are completed. Deal values are the consideration value announced or reported including any assumption of debt and liabilities. Figures relate to actual stake purchased and are not multiplied up to 100%. The location of the assets being acquired determines the analysis location. We define Asia as excluding the Russian Federation, Australia and New Zealand. All presented numbers of deals exclude all of those deals with no reported value. A full list of transactions throughout 2007 and 2008 is available by visiting the Renewables Deals website at www.pwc.com/energy. .



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