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Power and utilities deals insights: 2021 outlook

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North American P&U deal value recovered in the second half of the year, while the sector continues to navigate external factors

The COVID-19 global pandemic continued to impact M&A activity in the Power & Utilities (“P&U”) sector in the last twelve months (LTM) through November 15, 2020, with overall decline in deal volume compared to 2019 (41 deals in LTM vs 52 deals in 2019). However, on a deal value basis, total deal value increased from $42.9 billion in 2019 to $48.1 billion in LTM. While the first half of 2020 saw sizable reductions in deal value at $13.3 billion, megadeals returned in the second half of the year driving an incremental $31.6 billion in deal value from June 30 through November 15. The industry experienced growth in both deal volume and value during this time period due to megadeals such as the Dominion Energy Natural Gas Transportation and Storage / Berkshire Hathaway and PNM Resources / Avangrid deals. 

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Challenges and opportunities for deals in 2021

PwC's Deals Sector Leader John Potter discusses the trends driving deals and outlook for 2021.

PwC's Deals Sector Leader John Potter discusses the trends driving deals and outlook for 2021. Explore national deals trends


Power and utilities deals outlook 

With the onset of the COVID-19 global pandemic in 2020, M&A activity in the P&U sector saw initial reductions in both deal volumes and total deal value; however, deal value rebounded in the second half of the year. While various factors impacted the deal market in LTM, including the broad impacts of the pandemic, dealmakers  found ways to strategically approach the deals market. Additionally, deal activity in the second part of the year underscored how companies are prioritizing environmental, social and governance (“ESG”) initiatives. 

As we progress into 2021, we expect pandemic related uncertainty to continue to impact the deal market; however, we also expect opportunistic M&A activity to continue as industry participants look to rebalance and rationalize portfolios and deploy capital into attractive growth and yielding investments, such as we saw in the second part of 2020. Additionally, as seen in LTM, we expect renewables and ESG initiatives to continue to drive investment thesis and deal activity in the sector.


Highlights of deal activity

  • The P&U sector saw a decline of 21% in deal volume in LTM 2020 as compared to 2019. However, the sector experienced a 12% increase in deal value in LTM 2020 as compared to 2019.
  • Strategic players drove deal value in LTM 2020, accounting for 74% of the total deal value.
  • Corporate deals dominated the sector in LTM 2020, contributing 84% of the total deal value.
  • Renewable deals remained a sizable portion of sector deal activity in LTM 2020, with 34% of the total deal value.
  • ESG became a noted driver of deal activity as major players in the P&U sector focus on ESG investment and goals.
  • The sector witnessed a resurgence of megadeals in LTM 2020, witnessing three megadeals accounting for 50% of the total LTM 2020 deal value.

Top 10 LTM P&U deals

Rank - #1

Value ($ billion) - $8.3
Target name - 38.5% share of TerraForm Power, Inc. 
Acquirer name - Brookfield Renewable Partners LP 
Transaction type - Corporate
Investor group - Financial
Date announced - 1/13/20

Rank - #2

Value ($ billion) - $8.0
Target name - Dominion Energy Natural Gas Transportation and Storage Business 
Acquirer name - Berkshire Hathaway
Energy Company
Transaction type - Corporate
Investor group - Strategic
Date announced - 7/5/2

Rank - #3

Value ($ billion) - $7.7
Target name - PNM Resources, Inc.
Acquirer name - Avangrid, Inc.
Transaction type - Corporate
Investor group - Strategic
Date announced - 10/21/20

Rank - #4

Value ($ billion) - $3.6
Target name - Direct Energy LP
Acquirer name - NRG Energy, Inc.
Transaction type - Corporate
Investor group - Strategic
Date announced - 7/24/20

Rank - #5

Value ($ billion) - $3.5
Target name - TC Pipelines, LP
Acquirer name - TC Energy Corporation  
Transaction type - Corporate
Investor group - Strategic
Date announced - 10/5/20

Rank - #6

Value ($ billion) - $3.3
Target name - Vivint Solar, Inc. 
Acquirer name - Sunrun, Inc.
Transaction type - Corporate
Investor group - Strategic
Date announced - 7/6/20

Rank - #7

Value ($ billion) - $1.2
Target name - University of Iowa Utility System 50-Year Concession
Acquirer name - ENGIE North America and Meridiam
Transaction type - Corporate
Investor group - Strategic
Date announced - 12/9/19

Rank - #8

Value ($ billion) - $1.1
Target name - Columbia Gas of Massachusetts Natural Gas Assets 
Acquirer name - Eversource Energy  
Transaction type - Corporate
Investor group - Strategic
Date announced - 2/26/20

Rank - #9

Value ($ billion) - $1.0
Target name - 527 MW Carlsbad Energy Center 
Acquirer name - Clearway Energy Operating LLC
Transaction type - Asset
Investor group - Strategic
Date announced - 12/9/19

Rank - #10

Value ($ billion) - $0.9
Target name - Vectren Infrastructure Services Corporation (Mverge Companies)
Acquirer name - PowerTeam Services, LLC
Transaction type - Corporate
Investor group - Strategic
Date announced - 2/3/20

“We saw a significant uptick in deal value starting in the second half of 2020 as ESG priorities created opportunities to re-evaluate portfolios and redeploy capital. We expect investor sentiment to drive activity while dealmakers balance ESG goals against still present infrastructure needs to support those goals.”

Jeremy Fago, US Power & Utilities Deals Leader

Key deal drivers

An evolving industry landscape will require P&U sector participants to be nimble and adaptive

As the COVID-19 pandemic persists, P&U sector participants are faced with understanding and succeeding in new ways of being. Shorter term, the industry grapples with ensuring strategies are in place for business continuity and preparedness, working alongside multiple stakeholders including governments, regulators, and customers, to drive successful outcomes over the course of the pandemic. Longer-term, the industry continues to evolve and draw upon expanding customer expectations. Digital and smart technology, customer empowerment, and a collaborative customer relationship are top of mind, putting the customer as a key center to business strategies.

Company-led ESG efforts are expected to drive momentum and focus

Momentum has continued to build for company-led ESG efforts, and recent deal activity has highlighted ESG as a primary deal thesis. As sector participants continue to progress forward, ESG is expected to be a focal point. In today’s market, investors and stakeholders are more frequently calling for -- and pointing to -- ESG as a key factor, viewing social good and profitability as increasingly intertwined. Sector participants will continue to evolve ways in which they pursue ESG initiatives, optimize and refine their ESG reporting, and embrace purpose-led strategies.

Initiatives to decarbonize will help to advance technology innovation and investment

As the sector progresses on initiatives to decarbonize over the coming decades, technology innovation will be key to achieving targets. Decarbonization is being driven from multiple sources, including company-led ESG initiatives, government-led policies, and stakeholder demand. Challenges of intermittency, technology advances, and scaling are front and center. Look for increases in research and development (“R&D”) and investment, with a focus on innovation which could include battery storage, advanced nuclear, carbon capture, green hydrogen, and electrification. 

Contact us

Jeremy R. Fago

Jeremy R. Fago

Principal, Power & Utilities Deals Leader, PwC US

Kenyon Willhoit

Kenyon Willhoit

Power & Utilities Deals Principal, PwC US

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