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More global deals but lower value points to growing trend for renewables M&A
A lack of investment opportunities in conventional generation is driving an increasing flow of M&A deals for renewable energy around the world.
EY’s quarterly report on power transactions shows that renewable energy accounted for 48% of all deals globally in the three months to June 2017.
There were more total deals globally in the quarter in the power and utilities sector in the second quarter of the year compared to the first (134 against 115), but overall deal value declined by 32% to $30.8 billion (£24 billion).
According to EY, this reflects the fact that renewables deals tend to be smaller in size than conventional power transactions.
Europe was the only region where deal value rose, with a 12% increase against the previous quarter and a 31% increase against the same period last year. The Americas saw the sharpest decline, with value falling by 72% versus the first quarter.
Global energy reform initiatives were also responsible for a good amount of deal activity, with asset privatisation generating $13.3 billion (£10.4 billion) in total value.
Matt Rennie, EY’s global power & utilities transactions leader, said: “With fewer opportunities for conventional generation investment in developed markets, we are seeing a decline in large-scale deals in the global power and utilities sector. Instead, the transaction landscape is moving toward smaller deals, driven in large part by renewable energy opportunities and asset privatizations as a result of governments seeking to aid economic growth.”
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