mergermarket, RÃ¶dl & Partner
The renewable energy space is expected to see a high level of mergers and acquisitions (M&A) activity in the next 12 months, according to a report published by mergermarket in association with RÃ¶dl & Partner.
In a survey conducted in Q2 2011 of 100 senior M&A practitioners involved in the renewable energy sector, 72 percent expect an increase in renewable energy M&A activity. This bullish sentiment could be attributed to factors including the devastating effects of the Fukushima disaster.
Sixty-seven percent of respondents expect Europe to be at the forefront of this increase, forecasting that the region will see significant activity. This is attributed by some respondents to Europe’s variety of resources, with one respondent noting, “Europe has a great diversity: The Nordics are great for wind power; Italy, Spain and Greece for solar; and continental Europe for geothermal and biomass.”
The long-term feed-in tariffs introduced by Germany are also highlighted as an important aid in bolstering renewable energy investment.
The renewable sector globally has seen 51 deals at a total value of 10.6 billion euros this year-to-date. Iberdrola’s pending 20 percent stake bid for Iberdrola Renovables SA is the biggest deal of the year at 2.6 billion euros, followed by Electricite de France SA’s 1.5 billion euro bid for EDF Energies Nouvelles SA (50 percent stake).
Additional findings in the report include:
- Respondents commented on the recent Fukushima disaster, believing it will prompt a movement toward rethinking nuclear energy, making the renewable energy sector an attractive alternative;
- Respondents are split regarding what impact the revolutions in North Africa will have on the renewable energy sector, with 44 percent believing it will have an impact and 41 percent believing it will not. A small percentage of respondents remain uncertain;
- More than two-thirds of respondents (67 percent) say emerging markets are very important in the context of M&A activity in the renewable energy space;
- The wind power and solar thermal niches are expected to see bustling M&A during next year, while biomass gains greater prominence;
- Respondents deem SPVs as an ever more attractive option for acquisitions, while interest in classical share deals wanes;
- Nearly three-quarters of the survey pool (72 percent) believe government support will be a very significant external driver of M&A activity in the renewable energy sector during the coming year;
- Nearly one-third of respondents (31 percent) believe feed-in tariffs constitute the most effective government policy for driving investment in the renewable energy sector.