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Transactions and finance - EY - Global

Renewable energy country attractiveness indices May 2012

Transactions and finance

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“Access to capital will remain the single biggest differentiator for companies in both the technology and infrastructure markets.” Ben Warren,
Energy and Environment Partner

M&A overview

Despite difficult economic conditions and falling policy support in Europe and the US, renewable M&A activity increased this quarter. Globally, an estimated US$21.7b (€16.3b) of transactions were completed – a 41% increase on last quarter.
Market consolidation was a key theme, particularly in solar and wind – something we expect to continue as participants try to control supply chain costs and reach new markets.

There was also increased interest in energy from waste.

The European market faces major challenges, with tariffs declining and even frozen, overcapacity in the supply chain, and difficult project finance conditions.


Q1 saw a marked slowdown in wind sector transactions. Activity in the US and Europe continued depressed because of uncertainties over the US Production Tax Credit scheme and economic problems in Europe.

We expect oversupply and price pressure to create further market consolidation. Some technology manufacturers will diversify into other renewable technologies; an example being the recent entry of Xinjiang Goldwind Science & Technology Co, a leading wind turbine developer, into the solar market.

In Q1, MidAmerican Energy agreed to buy an 81MW wind power project from Invenergy Wind LLC, its second renewable transaction in the last six months.

As part of its strategy to realize value from its 23.9GW global wind farm portfolio, Gamesa, a leading turbine manufacturer and developer, sold four wind projects with an operating capacity of 480MW to electricity firm Algonquin for nearly US$900m (€675m).

Marubeni, a listed Japanese conglomerate, and Innovation Network Corporation of Japan, a state-backed fund, announced a US$850m (€637m) takeover of Seajacks International, a UK-based offshore wind power service provider. They intend to develop offshore wind farms in Japan and the surrounding area.


Solar transactions rebounded in Q1, but were still 26% below average for the last 12 months. Activity increased in India and Japan, showing the Asian markets’ continued importance.

In January, SolarHybrid AG, a large-scale diversified solar business, looked to buy 2.25GW of solar projects from Solar Millenium AG, a bankrupt solar business, for an undisclosed sum. Earlier in the month, it bought solar projects from a distressed Israeli construction business.

Eastman Chemical Company announced the acquisition of Solutia Inc., a solar materials producer, for US$4.7b (€3.5b). The pending deal represented a 47% premium on the trading price, demonstrating a desire to benefit from anticipated growth in energy solutions and electronics, especially in the Asia Pacific region.

Global new energy sector ma deals

Biomass and energy from waste

The sector had an improved quarter, with transaction volumes up 40% from the 12-month average. M&A activity was driven by the need for clean alternatives to mass-burn incineration and landfill, and shows evidence of vertical integration as companies look to secure feedstock supply.

ENER-G holdings, a UK renewable energy developer, bought Biogen Power Ltd.. This gives it a portfolio of six approved sites, which could generate up to 60MW of power and treat 650,000 tonnes of waste annually.

Utility giant EDF is paying an undisclosed sum for its first biomass pellet manufacturing plant in Germany. It plans to use the pellets in its own biomass power operations, and supply third parties.

IPO overview

Global IPO markets had the worst quarter since Q2 2009. Around US$14.3b (€10.7b) was raised from 157 issues, down about 69% against Q1 2011. Despite difficult market conditions, some renewable businesses (mainly biofuel companies) raised capital in public equity markets though, but the value of these transactions was relatively low at around US$58m-US$75m (€44m-€56m).

As a result of poor renewable sector trading multiples and a deterioration in public renewable businesses performance, we expect thin issuance volumes in the coming quarters.

Many renewable businesses have shown intentions to list but are waiting until the market improves.

Debt markets and asset finance overview

Q1 saw increased activity in global debt markets. Close to US$1.7t (€1.3t) was raised – a small improvement on Q1 2011. There was a recovery in corporate bond issues, reflecting increased market stability and corporates starting investment programs.

Renewable businesses were relatively active in the debt markets, with a number of participants raising more than US$250m (€187m) in the bank loan, public bond and private placement markets. We don’t expect significant change in coming quarters, as current macro factors and sector policy concerns continue.

New asset finance fell sharply in Q1, with values at their lowest since Q1 2009, when the financial crisis was at its peak. Policy uncertainties continued to slow activity, with only US$24.2b (€18.1b) raised in Q1, a 30% decline on the previous quarter, and a 7% decline against Q1 2011.

Projects in China continued to raise the greatest amount of new asset finance for new energy projects, with US$8.3b (€6.2b) in Q1. The US and Europe followed, with US$4.9b (€3.7b) and US$4.3b (€3.2b) respectively.


Q1 saw exciting activity in developing wind markets, with large project finance deals in Mexico, Latin America and Thailand.

Marena Renovables Capital, backed by Macquarie’s Infrastructure Fund, Mitsubishi Corp. and PGGM, secured US$961m (€720m) in senior debt for its 396MW wind farm portfolio. This marks the largest commercial debt tranche for a wind plant in Mexico, and supports construction of Latin America’s largest single-phase wind plant.

Spanish utility, Iberdrola, and Neoenergia, a Brazilian power generator, secured US$220m (€165m) from Brazil’s national development bank for a 138MW portfolio of wind projects in Brazil. Iberdrola also raised €1.0b of A-rated bonds in the Eurobond market.

In January, Wind Energy Holding secured finance for the development of the 207MW Pho Cai Wind Farm. This will be the first large-scale wind project in Thailand, and the largest wind farm in southeast Asia. Financing secured at this stage was close to THB7b (€200m).

Q1 2012 new build asset build finance by region

Global new build asset finance raised value and volume

Biomass and energy from waste

The biomass and energy from waste sector received funding from private equity and alternative asset managers.

In January, Enova Energy and NuPower received US$125m (€94m) in mezzanine finance for the development of the UK’s Plainfield biomass plant. The debt was provided by The Carlyle Group, an asset manager, and will generate 37.5MW of clean energy.

In February, Waste Management Inc, a US business, and Viking Consortium Holdings, secured £153m (€183m) for development of the 20MW Cory & Wheelabrator Norfolk Waste-to-Energy Plant, which was also awarded a £91m (€109m) Government Waste Infrastructure grant.


The solar sector saw a number of significant fund raises in the US, South Africa and Bulgaria.

Topaz Solar farm, a 550MW solar PV power plant being built in California, accessed US$700m (€525m) in funding via a private placement of senior secured notes. The project is backed by MidAmerican Energy and will be one of the world’s largest solar installations.

Soitec Solar, a semiconductor manufacturer, secured funding estimated at US$329m (€247m) for South Africa’s 50MW Touwsrivier solar CSP plant, the country’s first large-scale CPV renewable energy plant.

At the end of Q1, SunEdison LLC secured €155m in non-recourse debt financing for the development of the 60.4MW Karadzhalovo PV Plant in Bulgaria. Construction began in September 2011 and the facility was interconnected in March 2012.

The quarter in focus


On these pages we provide a snapshot of the RECAI. For all the articles and features in this issue, download a printable version of Renewable energy country attractiveness indices Issue 33 2.2(MB), May 2012


Read our news release.


For more information on our services, please contact:

Ben Warren, Partner
Andrew Perkins, Partner
Arnaud Bouille, Director
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