EY Study: Driven by renewable energy transactions, global energy transactions get a historical peak

EY Study: Driven by renewable energy transactions, global energy transactions get a historical peak

The number of transactions in the renewable energy sector continued to increase in the second quarter, accounting for 46% of the total volume.

The value of transactions in energy and utilities reached an absolute record of $ 180 billion in the first half of 2018, despite a 14% decline in the second quarter from a similar period last year to $ 83 billion.

According to the EY Power transactions and trends: Q2 2018 (PTT), the renewable energy sector has accounted for nearly half (46%) of the volume of transactions in the second quarter of 2018.

The trend towards clean energy investment continued to boom in the second quarter, with 63 transactions totaling $ 12.9 billion.

It is noteworthy that the European Union's historic commitment to achieve a 32% share of renewable energy by 2030, as well as three US renewable energy projects totaling $ 3.8 billion, have set global investment agendas higher in clean energy. And utility companies have increasingly invested in new technologies in the second quarter.

In Europe, 5.5 billion dollars were invested in energy services and new technology transactions, while Tokyo Electric Power Company (TEPCO), a Japanese subsidiary, has set up a subsidiary to develop partnerships to develop innovative technologies.

"In Romania it is possible, given the continuous growth of prices on the futures markets, that the generators from renewable sources see a revival of the business, and soon, due to the technological progress that leads to the decrease of the specific investment costs in such technologies and to increase performance, to see business plans that no longer matter on support schemes for electricity from renewable sources. Moreover, the price to pay for the electricity produced by photovoltaic panels installed on individual roofs may soon become attractive for private initiatives.
Due to the delay in the evolution of strategic projects into new generating capacities, the competitive pressure needed in the sector may originate from these new capacities that use renewable energies. We expect also vertical integration, between suppliers and generators, but also horizontally, between generators of different technologies, given that the market price and CO2 price perspectives on the European market bring an oxygen balloon to the generators "Low-carbon", with attractive prices for sellers, "says Valeriu Binig, Partner EY Romania.

Developing markets accelerate the pace of transactions

In the second quarter, there was an increase in the popularity of emerging markets as investment destinations for traditional M & A transactions.

Thailand and India recorded transactions totaling $ 5.3 billion and $ 3.2 billion respectively, while in Estonia domestic and foreign domestic transactions totaled $ 600 million.
China ranks first in foreign investment in the second quarter, with announced $ 31.2 billion cross-border transactions, in line with the Chinese government's One Belt, One Road initiative.
Much of this amount ($ 27.4 billion) is the offer to take over the Portuguese company EDP by China Three Gorges.

After reaching a record high in the first quarter (63.1 billion dollars), the European M & A market remained strong, reaching $ 45.7 billion in the second quarter, accounting for 55% of the value total energy and utilities transactions globally.

Europe was the only region in which the transactions in the field took place with a premium of about 33% compared to the historically multiplied average of about 6.6 times.
The value of transactions in the Asia Pacific region rose by 78% in the second quarter of 2018 compared to the same period last year to $ 10.3 billion.Renewable energy has fueled most of the region's business with 25 clean energy transactions totaling $ 3.8 billion.

Though the value of transactions dropped 8 percent in the Americas as compared to the second quarter of last year, to $ 26.9 billion, the seven megatranzactions recorded (totaling $ 21.8 billion) increased activity in the region. In the US, 75% of the value of transactions in the Americas (20.2 billion dollars) was recorded.