NewsBase NRG Facebook Twitter LinkedIn NewsBase
Tel: +44 (0)131 478 7000
Contact Us
Commentary of the week

NewsBase - News, analysis and business intelligence from emerging markets

Renewables deal flow to grow

By Margaret Lee

Despite industry uncertainty and economic insecurity, the flow of deals in the renewables sector in 2011 reflected strong growth and increasing maturity as the sector moved further into the mainstream.

According to PwC’s annual global analysis of mergers and acquisition (M&A) transactions in the sector, deal value was up 40% and the consultancy expects deal flow to grow.

Overall, the 40% rise in M&A activity in 2011 resulted in deal value at a record high of US$53.5 billion, up from US$38.2 billion in 2010. For the first time, new generation technologies such as wind and solar overtook hydropower in deal volume.

Hydropower has traditionally constituted a significant section of deal flow and investment in renewables, with large-scale dam construction and a strong historical track record. With new generation technologies taking over, this reflects the shift in market perception of other renewables.

Billion-dollar deals dominated as solar, wind and energy efficiency deals surged ahead. One in every three deals last year was solar and overall deal value for the sector was up 56% from US$10.2 billion to US$15.8 billion. Solar and wind saw around US$16 billion worth of deals globally, with transactions worth US$10 billion completed in the energy efficiency sector. Overall deal value in solar and energy efficiency nearly doubled year-on-year and together, they accounted for the vast majority (79%) of the US$15.3 billion increase in the total value of all renewables deals. Paul Nillesen, a partner at PwC, said: “Deal-making in the renewables and energy-efficiency sectors is intensifying as the sector evolves. Sustained high deal numbers and record total value reflect a maturing of the sector. The trend is all the more noteworthy, given the uncertainty in the market and in government policies on renewables. We believe that deal flow will continue to be significant in the medium term.”

Challenging market

Growth in deal value was especially positive, given that it took place against a backdrop of financial and regulatory uncertainty around the world.

The European market was particularly challenging, with problems caused by sovereign debt and the Eurozone crisis likely to continue. Of course, that does make it fertile ground for takeovers – in 2011 European deal volumes dipped 6%, but overall value rose 80% from US$16.7 billion to US$30 billion.

While major deal activity in 2012 is expected to occur within the key manufacturing zones of China, the US and Europe, deal volume last year was also up in the rest of the world, which points to growing areas of interest. Whilst activity in North America fell in 2011, both in terms of deal volume and value, South American deal volumes were up 90%, with total value up from US$3.2 billion to US$6.8 billion.

Despite the difficult conditions in the market, PwC’s Nillesen expects to see deal flow increase this year. “Staying out of the markets in the hope things will improve cannot be assumed to be the right strategy. The potential for further destabilisation domestically, or at an inter-governmental level, cannot be ruled out, but if a deal is highly strategic, and mission-critical, then parties will still feel it is worth doing on the right terms,” he said.

Key drivers

There are a number of drivers behind current activity in renewables. Falling solar prices are bringing solar power closer to grid parity in some markets, and improving its economic profile in most. The entrance of pension and insurance funds, for example the US$1.3 billion investment by Danish pension insurance groups in offshore wind in Denmark, underlines a trend towards a maturing market and the creation of secondary markets, with assets sold for a second or third time. This is also supported by the trend towards larger deals, as well as growth in deal value.

While tragic, the disaster in Fukushima had a dramatic impact on the renewables sector. Many countries reappraised their energy strategy, with some, like Germany, disavowing their nuclear industry altogether.

This refocus provided a boost to the renewables industry, in terms of corporate interest and in terms of generation rollout. What is more difficult to predict is exactly which sub-sectors are likely to grow and how. Efficiency is clearly likely to continue on an upward trajectory. Corporate interest in the management of the price and emissions of power consumed, as well as concern over supply chain impact, are driving many corporations to look to increasing efficiency.

The latest report from the Carbon Disclosure Project (CDP) suggests that 43% of CDP respondents have achieved year-on-year emissions reduction, while only 28% of their suppliers have done so. With 39% of CDP respondents saying they would deselect suppliers that failed to meet formal environmental criteria within five years, there is a clear trend for emissions reduction on both an environmental and cost basis.


In areas of generation such as solar and wind, PwC expects to see greater consolidation and joint ventures, with a smaller number of large global players likely to emerge. Heavy competition and growing cost pressures are likely to drive consolidation in both the solar and wind sectors. Two recent profit warnings from Danish company Vestas are the most high-profile example of the challenges facing some wind power companies.

Future developments in the solar sector appear the most uncertain. Prices crashed in 2011 in large part owing to cheap Chinese manufacturing, causing problems for producers in the US and Europe.

While this led to growth in installations, a number of leading solar manufacturers were forced out of the market. Many leading Chinese manufacturers are facing heavy debt burdens, however, and there is a likelihood of overcapacity in the market.

At the same time the price of silicon appears to be on the rise – with Bloomberg New Energy Finance recently reporting the third weekly increase in the price – so developments in solar may prove difficult to predict.

Significant deal flow is expected throughout 2012 despite industry and economic uncertainty, but the report did warn that the sector was facing considerable growing pains. Continuing uncertainty in the Eurozone will still make the deal environment challenging and a deeper crisis would undoubtedly dampen deal flow further.

Yet steady interest from Asia is likely to continue to drive the market. While European bidders accounted for 48% of the total, and North America for 24%, the value of deals with Asian bidders almost doubled to US$9.4 billion or 18%, up 12% from 2011.

Despite the ramp-up in deal value in 2011, stocks in renewable energy companies suffered on the global indices as the economic situation in Europe deteriorated. Standard & Poors’ S&P Global Clean Energy Index, which tracks the performance of 30 of the most liquid and tradable global clean energy companies, fell by nearly 44.5% during 2011.

Such fluctuation in share prices not only demonstrates the current instability in the market but also reinforces the opportunities that are available to dealmakers in the cleantech field.


New research paints Iran as Crimean winner - from MEOG Issue 470 08-Apr-2014

Siemens reassures Russia on power project completion - from Energo Issue 707 02-Apr-2014

Moscow and Baghdad: future allies in global oil trade? - from FSU OGM Issue 775 26-Mar-2014

Brussels fights back - from FSUOGM Issue 774 19-Mar-2014

UK may require uptick in LNG imports - from GLNG Issue 310 13-Mar-2014

Implications of the Ukrainian crisis - from Energo Issue 703 05-Mar-2014

Syria’s crude production nears vanishing point - from MEOG Issue 464 25-Feb-2014

Russian refineries come into focus - from FSU OGM Issue 770 19-Feb-2014

Russia takes steps on shale - from UOGM Issue 193 11-Feb-2014

Moving towards a decision on Keystone XL - from NorthAmOil Issue 290 06-Feb-2014

Kurdish export plans currently little more than pipe dreams - from DMEA Issue 141 29-Jan-2014

East Med faces uncertain 2014 - from EurOil Issue 236 23-Jan-2014

Asian NOCs continue investment push in slower M&A climate - from AsianOil Issue 408 15-Jan-2014

2014: A new year for renewables - from REM Issue 389 19-Dec-2013

Colombia remains core to Gran Tierra’s expansion plans - from LatAmOil Issue 493 10-Dec-2013

Privatisation push in Australia - from AsiaElec Issue 236 03-Dec-2013

Thailand eyes gas market liberalisation as LNG imports rise- from GLNG Issue 297 20-Nov-2013

UN Warsaw conference faces reaction against renewables - from Energo Issue 690 20-Nov-2013

Panama Canal widening to expedite US LNG sales to Japan - from GLNG Issue 295 14-Nov-2013

In from the cold: Assessing the impact of Iran’s possible return - from EurOil Issue 227 07-Nov-2013

Diving into the Red River - from UOGM Issue 180 29-Oct-2013

Alberta, China to see benefits from trade agreement - from NorthAmOil Issue 277 24-Oct-2013

Eyeing up Uganda’s downstream - from DMEA Issue 128 16-Oct-2013

Ineos’ issues indicative of European refining malaise - from EurOil Issue 223 09-Oct-2013

India’s gas demand leaves exporters upbeat - from AsianOil Issue 395 02-Oct-2013

Anti-corruption campaign could end CNPC’s pipeline dominance - from ChinaOil Issue 463 26-Sep-2013

Cities powering the way to low-carbon future - from REM Issue 375 12-Sep-2013

Eni and Reliance bet on Venezuelan resurgence - from LatAmOil Issue 479 03-Sep-2013

Coal stays dominant in China - from AsiaElec Issue 222 27-Aug-2013

Investors in Asian LNG terminals advised to take long view - from GLNG Issue 283 28-Aug-2013

Keeping Europe’s old reactors open
from Energo Issue 676 14-Aug-2013

US lawmakers agree to tighten Iran sanctions
from MEOG Issue 437 06-Aug-2013

Russia ready to grant tax breaks for new Arctic projects
from FSU OGM Issue 743 31-Jul-2013

Rattling sabres: Juba and Khartoum walk to the precipice
from DMEA 116 Issue 24-July-2013

Don’t mess with Texas
from NorthAmOil 268 Issue 22-July-2013

M&A quarterly: Deafening silence
from Euroil Issue 09-July-2013

Philippine dreams of LNG terminals in question
from AsianOil Issue 382 03-July-2013

China backs research into methane hydrates potential
from ChinaOil Issue 450 27-June-2013

IEA redraws the energy map
from REM Issue 363 20-June-2013

Parex strikes right balance in Latin America
from LatAmOil Issue 467 11-June-2013

Asia’s coal crisis
from AsiaElec Issue 210 04-June-2013

Australia faces threats to LNG drive
from GLNG Issue 271 30-May-2013

Lithuania must take responsibility for its nuclear policy
from Energo Issue 664 22-May-2013

Turkey, Israel rapprochement could redefine region's energy map
from MEOG Issue 425 14-May-2013

Turkmen oil sector aims high
from FSUOGM Issue 731 08-May-2013

Putin defends Russia's unconventional gas stance
from UOGM Issue 154 30-Apr-2013

Australia suffers for now
from AsiaElec Issue 203 16-Apr-2013

Overcoming hurdles: Iraq’s oil renaissance
from Downstream MEA Issue 101 10-Apr-2013

Challenges abound for methane hydrate development
from AsianOil Issue 369 03-Apr-2013

Chinese upstream efforts in Afghanistan ready to bear fruit
from ChinaOil Issue 437 28-Mar-2013

Deciphering the global ethanol market
from REM Issue 350 21-Mar-2013

PDVSA and the post-Chavez era
from LatAmOil Issue 454 12-Mar-2013

Europe pins hopes on opening Southern Gas Corridor
from EurOil Issue 192 05-Mar-2013

Bulgarian power politics bring down government
from Energo Issue 652 27-Feb-2013

Israel ahoy: first gas starts flowing through the pipes
from MEOG Issue 412 12-Feb-2013

Europe's evolving gas markets and the Russia-Ukraine dispute
from FSUOGM Issue 719 13-Feb-2013

Brazil prepares to join the shale revolution
from Unconventional OGM Issue 142 05-Feb-2013

Shell review fuels debate over Arctic drilling
from NorthAmOil Issue 238 24-Jan-2013

LNG momentum steps up in Mozambique
from DMEA Issue 89 16-Jan-2013

EU gaining interest in the Eastern Med, says commissioner
from EurOil Issue 184 08-Jan-2013

Japanese refineries look overseas for investment opportunities
from AsianOil Issue 355 12-Dec-2012

Water shortage could drown China's shale gas hopes
from ChinaOil Issue 423 06-Dec-2012

Off the human footprint
from REM Issue 336 29-Nov-2012

Debt mountain casts shadow over PDVSA production plan
from LatAmOil Issue 440 20-Nov-2012

Uganda: Deadlock, delays and dishonesty
from AfrOil Issue 465 13-Nov-2012

Mixed messages for Australian coal
from AsiaElec Issue 182 06-Nov-2012

LNG supply landscape fogged by US uncertainties, says BG
from GLNG Issue 243 01-Nov-2012

EU sanctions on Iranian gas exports will have limited impact
from Energo Issue 636 24-Oct-2012

Gazprom-EU standoff turns political
from FSUOGM Issue 703 10-Oct-2012

Brazilian shale potential struggles to emerge
from UOGM Issue 126 02-Oct-2012

Saskatchewan pushes to drive up output
from NorthAmOil Issue 223 27-Sep-2012

Libyan insecurity spills into terrorism
from DMEA Issue 74 19-Sep-2012

Australia's LNG sector set for a slow-down post 2020
from AsianOil Issue 341 05-Sep-2012

Trans-Pacific Partnership meets to focus on rules for SOEs
from ChinaOil Issue 409 30-Aug-2012

The future for Polish renewables
from REM Issue 321 16-Aug-2012

Argentina's unconventional conundrum
from LatAmOil Issue 426 14-Aug-2012

BP's Mediterranean assets hold out hope
from AfrOil Issue 451 07-Aug-2012

Asian market gloom
from AsiaElec Issue 168 31-Jul-2012

Poland's bittersweet victory in the battle for CO2 permits
from Energo Issue 622 18-Jul-2012

UK report gives 'green light' for shale gas development
from UOGM Issue 114 09-Jul-2012

Saskatchewan pipeline safety in the spotlight
from NorthAmOil Issue 210 28-Jun-2012

Alberta aims for GHG reduction despite oil sands boom
from GCEM Issue 273 21-Jun-2012

Middle East petchem industry faces North American competition
from DMEA Issue 60 13-Jun-2012

An uncertain road ahead for Nabucco
from EurOil Issue 155 05-Jun-2012

PTTEP pips Shell in Cove Energy bid
from AsianOil Issue 327 30-May-2012

Uphill struggle predicted for shale developments in China
from ChinaOil Issue 395 24-May-2012

Support sought to prevent UK offshore wind blowing off course
from REM Issue 308 17-May-2012

Brazil shelves shale plans to focus on subsalt
from LatAmOil Issue 412 08-May-2012

Insecurity in the Sahel
from AfrOil Issue 437 01-May-2012

Uncertain signals from Indonesia
from AsiaElec Issue 154 24-Apr-2012

South Korean shipyards buoyed by LNG vessel orders
from Global LNG Issue 215 19-Apr-2012

Russia loses out to Chinese influence in Mongolia
from Energo Issue 608 11-Apr-2012

Qatar, Kuwait worst-placed for Strait of Hormuz closure
from MEOG Issue 369 04-Apr-2012

Capstone Turbines helping to boost associated gas utilisation in Russia
from FSU OGM Issue 675 28-Mar-2012

Canada maintains unconventional exploration push
from NorthAmOil Issue 196 22-Mar-2012

Warrego sees shale promise in Western Australia
from UOGM Issue 97 12-Mar-2012

Sluggish EUA market now wants to see details of setting aside
from GCEM Issue 258 08-Mar-2012

Harvesting Ghana's hydrocarbon wealth presents opportunities
from DMEA Issue 45 29-Feb-2012

Falklands oil push exposes Argentine energy misfortunes
from EurOil Issue 140 21-Feb-2012

India faces Farsi ultimatum
from AsianOil Issue 312 15-Feb-2012

China's North American investment spree continues with BC deal
from ChinaOil Issue 380 09-Feb-2012

Renewables deal flow to grow
from REM Issue 293 02-Feb-2012

Colombia's 2012 growth prospects belie trouble
from LatAmOil Issue 397 24-Jan-2012

Goodnight, and Goodluck: Nigeria's fuel price struggle
from AfrOil Issue 422 17-Jan-2012

The Sino-US trade conundrum
from ChinaOil Issue 376 11-Jan-2012

Saudi awaits accurate estimate of unconventional gas resources
from UOGM Issue 87 19-Dec-2011

Venezuelan opposition sets out intentions
from LatAmOil Issue 393 13-Dec-2011

20WPC - showcasing Qatar, GTL
from Downstream MENA Issue 35 07-Dec-2011

Russia facing challenges in gas talks with China
from FSU OGM Issue 660 30-Nov-2011

NewsBase Ltd, Centrum House, 108-114 Dundas Street, Edinburgh, EH3 5DQ Tel : +44 (0)131 478 7000, Fax: +44 (0)131 478 7001,
© 2013 NewsBase Ltd. NewsBase