Corporate acquisitions of gigawatt-scale renewable energy generation platforms in Europe have surged in 2023, with the deal count representing a ~70% rise, YTD 2023. By the year’s end, Enerdatics believes that the number of such deals will double year-on-year, driven by the wave of corporate consolidation being effected by well-capitalized, large-scale investors. Private equity (PE) firms, who have traditionally led the deal activity in this space, are now seeing competition from privately funded and listed companies, who are rushing to take over development platforms as well as power production and distribution businesses.
Enerdatics believes that this shift is driven by the rise of value-accretive opportunities over the past year or so, as high-quality development assets are fetching lower valuations than those observed in 2021. Additionally, a range of recently unveiled incentives by the EU as well as several national governments, including permitting reforms, have spurred companies with large reserves of cash to invest in platforms that have huge upside potential in the near-term. Meanwhile, Enerdatics observes that opportunities for investing growth capital into public companies at attractive valuations are also driving deal activity, as seen in the shift in deal targets this year. So far in 2023, three out of the five acquisitions have targeted private equity-backed development platforms (X-Elio and Opdenergy in Spain, and Parkwind in Belgium).
Underscoring this trend is the recent acquisition of German utility STEAG by Spain-based PE firm Asterion Industrial Partners for an enterprise value of $2.8bn. STEAG owns 4.1 GW of coal-fired power plants and more than 200 MW of operating wind assets, coupled with more than 1.3 GW of wind farms in construction and under development. The company also has a solar development business with several gigawatts of assets under management and in the pipeline. The deal represents the largest corporate take over of a renewable generation platform in Europe, by value, since Mitsubishi and Chubu Electric acquired Eneco for $4.6bn in 2020.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.