The renewable energy sector is expected to see a 72% increase in M&A activity in the coming year, according to ‘M&A in Renewable Energy: Global Outlook’, a report by Rödl & Partner and mergermarket, which surveyed 100 senior M&A practitioners. 67% of these expect to see significant M&A activity in Europe.
While this indicates confidence in the sector, it is unclear what impact the current economic turmoil in Europe and regulatory uncertainty in certain countries will have on the deal pipeline.
Asia Pacific countries also fared well in the survey, with 62% of respondents saying the region will see significant M&A activity in the sector. Japan in particular is considering alternative forms of energy after the Fukushima disaster, and the introduction of a renewable energy bill, designed to encourage investment, is expected to boost renewable energy M&A activity.
There is also huge potential in emerging countries, with China doubling its installed wind capacity year on year and statistics showing its renewable energy capacity now increasing at a faster pace than that of its coal plants.
French utility, EDF SA has acquired the 50% it did not already own in EDF Energies Nouvelles for (€5.5b). It specializes in renewable energy production, and EDF considers the acquisition important to strengthen its sector position.
Backing up mergermarket’s report findings about Europe taking the lead, this quarter ACS Actividades de Construccion y Servicios SA, Spain’s largest construction company, sold its stake in nine wind farms to two funds directed by Canepa Asset Management for €223.4m, and sold 11 wind assets for €596.5m totaling 443MW of capacity to Bridgepoint, a European private equity firm.
Marubeni Corporation, the Japanese trading company, has agreed to buy a 49.9% stake in a 172MW offshore wind farm in the UK, from DONG Energy AS for £200m (€230m), increasing its renewable energy capacity to 450MW. This shows a current trend for Asia Pacific companies to buy European assets, both for their attractive financial returns and for renewable energy knowledge and expertise.
CBD Energy Ltd., an Australian renewable energy developer, bought a planned 100MW wind-power project in New South Wales state from RES Group. The joint venture plans to develop AU$6b (€4b) of renewable-energy projects over the next eight years.
Hansen Transmissions, the Belgium-based wind turbine gearbox maker, agreed a £444.8m (€519.1m) takeover bid from German company ZF Friedrichshafen.
According to the latest quarterly report from Mercom Capital Group, M&A activity in Q3 could signal the start of a consolidation period in the PV industry. Venture capital funding in the solar sector has increased from last quarter to US$372m (€274m).
In August, NRG Energy Inc. completed the purchase of a 290MW solar project in Arizona from First Solar Inc. Agua Caliente is the world's largest solar PV project under construction and is expected to be completed by 2014
SunEdison LLC, the solar energy subsidiary of MEMC Electronic Materials Inc, has acquired a 100% stake in Fotowatio Renewable Ventures Inc for US$134.9m (€99.2m). Fotowatio is a leading global developer and operator of 28 solar power projects, and this should boost SunEdison’s US solar portfolio to 1.4GW.
RREEF Infrastructure has signed a sale and purchase agreement with German concentrating solar power specialist Solar Millennium AG and Spanish Construction Company Obrascon Huarte Lain SA to buy 49% of the Arenales project in Andalusia, a 50MW solar power plant project. This will be Solar Millennium’s fifth Spanish solar power plant and has received funding from eight European banks.
Foresight Group LLP’s FORVEI venture bought three Italian solar plants, with a total capacity of 13MW, from Spain’s OPDE Group. According to Federico Giannandrea, partner at Foresight, the €55m deal is the largest lease financing by a single bank for a solar deal in Italy. As part of the agreement, in October FORVEI bought another 20MW of Italian solar farms developed by the OPDE, bringing its portfolio to about 40MW.
Green Planet Group Inc has bought a 100% stake in Arizona Independent Power LLC, a pump storage energy technology firm, introducing a pump storage project with a maximum generating capacity of 800MW at a total cost of around US$1.2b (€0.9b).
Renewable Power International, a Spanish renewable energy producer, has been bought for €230m in a management buy out backed by Demeter Partners and infrastructure fund Cube. Renewable Power owns 17 small hydro plants in Spain and Portugal with a combined installed capacity of 85MW.
This is a sample of the main global M&A transactions in the renewables sector over the past quarter.
Sources: All information relating to M&A activity in the sector is obtained from publicly available sources.