Private equity and infrastructure fund investment in global renewable energy is flying in the face of the downturn, according to consultants KPMG.
The firm’s latest survey of 500 senior executives, Green Power: 2012, predicts an increase in global renewable energy mergers and acquisitions (M&A) activity in the sector over the next 18 months.
Although securing debt financing to fund acquisitions is harder than it was, the majority of respondents said they expected deals in the renewables sector to remain robust over the next five years.
Hydro, onshore wind and solar photovoltaic investments, in particular, are being seen as safe-havens for long-term money.
“What our research has found is that green energy is becoming viewed by investors in much the same way as conventional infrastructure asset classes, like water companies and electricity grids,” says Andy Cox, head of power and utilities at KPMG. “Renewables are seen as safe and stable.”
During 2011, KPMG reports a total of 591 deals valued at $51.2 billion, significantly up on the 431 transactions worth $24.2 billion in 2010.
And while wind and solar deals were up 132% and 37% respectively, biomass activity far outstripped both with a 300% increase in deals.
This year has started bullishly with 150 M&A transactions totalling $9 billion in the first quarter, up slightly on the same period last year.
But the report warns that the Eurozone has been severely affected by the debt financing crisis and is falling behind as a destination for investment.
US, India and China now top the list of attractive options for investors with five out of ten new investors from Asia themselves.
“The investment climate remains fragile,” cautions Cox. “While it is exciting to see so many respondents expecting to invest in green energy in the near future, this could all turn on a dime if struggling governments continue to retrospectively cut tariffs and damage confidence.”
Overall, though, the report paints a positive picture with an increase in deals up to $500 million anticipated.
For further information:
UK government launches £35 million fund for eco-entrepreneurs (26-Apr)
Global clean energy investment up 6.5% led by the US (12-Apr)
GE and Carbon Trust team up to back low-carbon investment (21-Feb)
Energy Innovation Centre connects up bright ideas to £29 million fund (17-Feb)
09 May 2012