6 minute read 6 May 2019
Workers mounting solar panels

How demand for renewables drives M&A activity

By EY Global

Multidisciplinary professional services organization

6 minute read 6 May 2019

Renewable energy is top of mind for a variety of stakeholders, including strategic investors, financial sponsors, corporations and governments.

As seen in the EY Power Transactions and Trends Q1 2019 report, clean energy deals continue to dominate the M&A universe, making up 56% of deal volume and 61% of deal value in Q1 2019. Stakeholders across the power and utilities value chain continue to drive the need for more renewables:

  • Strategic investors: In Europe, ENGIE has announced plans to invest between US$12.4b and US$13.5b in renewables and behind-the-meter solutions. Enel says it will develop 11.6 GW of renewable capacity by 2021. Meanwhile, utilities in the US are expected to spend US$12.5b in renewable energy capital expenditures in 2019.
  • Financial sponsors: Kohlberg Kravis Roberts & Co. L.P. (KKR) agreed to make a US$900m equity investment in NextEra Energy Partners to facilitate the acquisition of a 611 MW renewables portfolio.
  • Governments: In Europe, Greece and France announced new energy plans promoting renewables growth, while in the US, local government continues to drive renewables progress with New Mexico joining California, Hawaii, Washington, DC and Puerto Rico with 100% carbon-free goals. In Asia-Pacific, India has set a target of 100 GW of solar power by 2022.
  • Corporations: In the US, over 200 companies, including Google and Facebook, launched the Renewable Energy Buyers Alliance with the goal to bring 60 GW of new renewables online in the US by 2025.

The growth in clean energy has created investment challenges for the legacy fossil fuel industry. The Norwegian Government has proposed the phaseout of oil and gas exploration and production companies from its US$1t sovereign wealth fund. The German Government announced plans to shut all of its 84 coal-powered plants by 2038 and replace them with renewable energy plants. This energy transition is seeing the emergence of major oil and gas players as challengers to the traditional power and utilities market – Royal Dutch Shell has announced its ambition to become the world’s largest electricity company by 2035.

M&A headwinds emerge in Q1

2018 saw a record high in P&U deal value and volume; however, Q1 2019 deal value declined 33% from Q4 2018 levels. Only renewables and water and wastewater deal value increased quarter over quarter. These falling deal values are a continuing trend – the majority of 2018 deal value occurred in the first two quarters. Investors are grappling with a more complex M&A environment driven by concern around interest rates and political tension. 

Global deal value Q1 2019


Global P&U deal value reached US$20.6b in Q1 2019, a decline of 33% from Q4 2018.

Trends shaping dealmaking

A focus on recycling capital
  • Sempra continued its process of simplifying its business structure by selling 724 MW of operating wind and battery assets to AEP for US$1.1b. The deal follows Sempra’s US$1.5b sale of renewable assets to Consolidated Edison last year.
  • Canadian utility ENMAX acquired US electricity network utility Emera Maine from Emera Inc. for US$1.3b. The deal furthers Emera Inc.’s strategy to reduce debt and support its US$4.9b regulated capital expenditure program. Also, this quarter, GE continued restructuring, selling its stake in several wind farms to Enel for approximately US$250m.
  • UK-based utility SSE announced plans to dispose assets to raise US$1.96b and restore its balance sheet. The move comes after a challenging 2018 for the company that included a US$543m trading loss, the failed merger between its electricity retail arm and Npower, and the suspension of capacity payments.
Cross-border investment in renewables
  • In Latin America, Chinese-based CGN Energy International agreed to acquire wind and solar projects totaling 540 MW combined capacity from Enel for US$783m.
  • EverSource Capital, a joint venture between Everstone Capital and Lightsource BP, and the National Investment and Infrastructure Fund of India (NIIF) acquired a significant minority stake in Ayana Renewable Power. Ayana Renewable Power plans to add at least 2,000 MW of renewable power in countries such as India, Bangladesh, Nepal, Bhutan, Sri Lanka and Myanmar.
Convergence with oil and gas
  • Total Eren, a subsidiary of Total SA, acquired NovEnergia II, a Luxembourg-based renewables company with a portfolio of 675 MW, for US$1.1b.
  • A consortium of companies, including Equinor Energy Ventures, acquired an undisclosed stake in Yellow Door Energy, a provider of solar and energy efficiency solutions for commercial and industrial customers in the Middle East and Africa.

Global capital flows in Q1 2019

Our global capital flows track year-to-date M&A across the globe, highlighting the top countries globally.

  • Greater China was the top global investor for the quarter, investing US$3.4b domestically and US$0.9b overseas.
  • The UK was the top outbound investor, investing US$1.9b in foreign countries, including US$0.7b in Mexico and US$0.5b in Luxembourg.
  • The US continued to attract the most investment, with investments domestically and inbound from Canada and the UK.
Investment activity globally by country, Q1 2019 (US$b)

Total shareholder return (TSR) and valuation analysis

We break down our view of TSR and EV/FY2 EBITDA by regions and segments.

Total shareholder return — regional comparison (%) 

TSR and valuations segment dashboard

Power and utilities underperform local market indices

  • The quarter-to-date (QTD) TSR of the EY Americas Utilities Index was 14.5%, which is lower than the regional market (as benchmarked by the S&P 500 index), which returned a quarterly TSR of 14.8%. However, the EY Americas Utilities Index outperformed Europe and Asia-Pacific (QTD TSR of 8.4% and 8.2%, respectively).
  • Americas P&U companies continue to be the sector’s highest valued at 10.7x EV/FY2 EBITDA compared to 7.3x and 10.3x for Europe and Asia-Pacific, respectively. The higher valuation is driven mainly by a strong outlook for growth in the Americas.
  • The QTD TSR of the EY Europe Utilities Index was 8.4%, which is significantly lower than the QTD TSR for the European benchmark index STOXX Europe 600, which returned 12.4% for the quarter.
  • European medium and small market capitalization integrated as well as generation companies continue to be valued lower across Europe, as well as the rest of the globe.
  • The EY Asia-Pacific Utilities Index performed slightly lower than the Nikkei 225, the Asia-Pacific regional benchmark index. Asia-Pacific utilities returned 8.2% QTD compared with the market at 9.6%.
  • Asia-Pacific gas utilities show the highest valuation across the globe with an EV/FY2 EBITDA of 14.8x. 

Power transactions and trends: Q1 2019

Access more information, including regional analysis and a detailed list of companies, on SlideShare. 

Find out more

Top five deals per region in Q1 2019


Announcement date Target

Target country/

bidder country

Bidder Deal value (US$b) Bidder rationale Segment
25 March Emera Maine US/Canada ENMAX Corporation 1.3 Aligns with ENMAX’s strategy to grow through expansion of its regulated utility business in North America Integrated
4 March NextEra Energy Resources, LLC (six power plants) US/US NextEra Energy Partners, LP 1.0 Supports a continued focus on growing its renewables portfolio through sponsor drop downs Renewables
28 January

Waneta Expansion Hydroelectric Project (51% stake)

Canada/Canada Columbia Basin Trust; Columbia Power  1.0 Helps transfer control of the assets to the people of Columbia Basin Generation
12 February Sempra Renewables, LLC US/US American Electric Power Company Inc. 0.9 Part of AEP’s plan to invest US$2.2b in contracted renewables by 2023 Renewables
27 March Valener Inc. Canada/Canada Noverco Inc. 0.8 Fits Noverco’s plan to privatize Valener Gas utility

Note: All deals are announced deals, and the values indicated are disclosed enterprise values comprised of equity and debt components.


Announcement date Target

Target country/

bidder country

Bidder Deal value (US$b) Bidder rationale Segment
13 February Veja Mate Offshore Project GmbH (80% stake) Germany/Germany KGAL GmbH & Co. KG; Ingka Holding B.V.; Commerz Real AG; wpd invest GmbH 2.6 Supports Commerz Real’s sustainability goal to achieve a 2020 target of renewable energy production exceeding energy consumption Renewables
27 February NovEnergia II Luxembourg/France Total Eren 1.1 Aligns with bidder’s strategy to expand in the European market by enabling market entry into Luxembourg; Total Eren is already present in France, Greece and Italy Renewables
1 February

SSE Plc (Dunmaglass wind farm) (35.5% stake); SSE Plc (Stronelairg wind farm) (35.5% stake)

UK/UK Greencoat UK Wind Plc 0.6 Expands Greencoat’s portfolio of renewable energy assets Renewables
28 January En+ Group plc (10.55% stake) Russia/Switzerland Glencore Plc 0.5 Transaction is part of a securities swap that was done to facilitate delisting of En+ Group Generation
29 January Miya Luxemburg Holdings S.a.r.l Luxembourg/UKa Bridgepoint Advisers Limited 0.5 Supports bidder’s strategy to invest in operationally strong natural resources businesses Water and wastewater

Note: All deals are announced deals, and the values indicated are disclosed enterprise values comprised of equity and debt components.


Announcement date Target

Target country/

bidder country

Bidder Deal value (US$b) Bidder rationale Segment
28 March

China Power Clean Energy Development Co. Ltd. 

(73.58% stake)

Greater China/ Greater China China Power International Holding Limited 2.9 Aligns with bidder’s strategy to expand its renewables portfolio and delist the target company from the Hong Kong Stock Exchange Renewables
1 March

Ayana Renewable Power 

Private Limited

India/UK CDC Group plc; National Investment and Infrastructure Fund (NIIF); EverSource Capital Group 0.3 Furthers bidder’s strategy to expand into India’s renewable energy market Renewables
22 February

Youngduk Wind Power Co., Ltd.; Yeong Yang Wind Power Corporation

South Korea/ South Korea Samtan Co., Ltd.; Shinhan Alternative Investment Management Inc. 0.2 Supports investors’ plans to expand into wind energy Renewables
7 March

Qinhuangdao Qinre Electric Power Co., Ltd. (40% stake); Hebei Zhanghewan Storage Power Generation Co., Ltd. 

(45% stake)

Greater China/ Greater China Jointo Energy Investment Co., Ltd. Hebei 0.2 Enables Jionto Energy Investment to consolidate market share and enhance power generation capacity Generation
20 March

TBEA Xinjiang New Energy 

Co., Ltd.  (15.02% stake)

Greater China/ Greater China Bank of Communications Financial Asset Investment Co., Ltd. 0.1 Improves the financing capacities of Xinjiang and supports the development and operation of wind and solar projects Renewables

Note: All deals are announced deals, and the values indicated are disclosed enterprise values comprised of equity and debt components.


Waves of global capital from both strategic investors and financial sponsors are driving power and utilities M&A, supported by high demand for renewable assets.

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By EY Global

Multidisciplinary professional services organization