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Renewables Deals* 2009 Annual Review

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Renewables Deals* 2009 Annual Review Industries Energy, Utilities & Mining Renewables Deals* 2009 Annual Review Mergers and acquisitions activity within the global renewable power market *connectedthinking Contents 01 Introduction 02 Report highlights 04 Deal totals: different sectors ebb and flow 06 Deal makers: the 2009 players 08 Deal places: a focus on markets worldwide 10 Europe 12 North America 14 Asia Pacific 16 Looking ahead 17 Contact us Methodology and terminology Renewables Deals includes analysis of all global renewable power sector deal activity. We define this as all deals relating to power generation by biofuels (incl. biomass, biodiesel and ethanol), solar, wind, hydro, tidal/wave and geothermal sources. We include deals relating to manufacturers and developers of renewable technologies (for example, wind turbine manufacturers and solar technology firms), which we identify in a separate ‘technology’ category. We exclude deals relating to nuclear power assets, those centred on energy efficiency and purchases of development rights. This year, we have expanded the range of data sources to provide the fullest possible account of deal-making for renewable power assets. The analysis is based on published transactions from the Dealogic ‘M&A Global database’, supplemented by databases from John S Herold; Mergermarket; Capital IQ and Thomson. Analysis encompasses announced deals, including those pending financial and legal closure and those which are completed. Deal values are the consideration value announced or reported including any assumption of debt and liabilities. Figures relate to actual stake purchased and are not multiplied up to 100%. The location of the assets being acquired determines the analysis location. The total volume and value of deals differ slightly to those listed in our Power Deals 2009 publication due to the subsequent deduplication of one US$98 million deal. The Asia Pacific region is deemed to include Australasia, except where otherwise explicitly stated. Throughout the report, the Russian Federation is treated as a geographic entity in its own right. All presented numbers of deals exclude deals with no reported value. A full list of transactions throughout 2009 is available by visiting the Renewables Deals website at www.pwc.com/energy. Introduction 01 Welcome to the second edition of Our review shows that renewables deals Renewables Deals, an annual review by form a significant part of overall power PricewaterhouseCoopers of deal-making in sector M&A activity but that core the renewable energy sector. It sits (non-hydro) renewables deal activity has alongside its companion report – Power been very subdued. In part this reflects Deals – and, together, the two publications continued difficult conditions in credit provide a comprehensive look at trends and markets. In addition, many key players the outlook for M&A activity in the power have been focused on developing project utilities sector. portfolios that they have built up over a number of years. In this sense, investment This report examines the rationale behind is happening but not through M&A activity. the overall trends and the key individual deals in the renewable energy sector. We We look back, at 2008 and 2009, and have expanded the range of data sources ahead – through 2010 and beyond. to provide what we believe to be the fullest The end of 2009 saw the difficulties in account of deal-making for renewable Copenhagen of achieving global power assets. agreement on a successor to the Kyoto Protocol. In general, we do not see this as We also highlight, in a series of deal a key factor affecting deal-making as dialogues throughout the report, some of companies will be much more focused on the critical issues for companies engaging national and regional policy measures, in deal activity within the sector drawing on such as in the EU and US, which have a our global experience as an adviser to more direct bearing on deals. Looking players in major deals in renewable energy ahead, however, we see the outlook for markets. renewables deal-making remaining tough with the triggers for an upturn in M&A continuing to be uncertain. Manfred Wiegand Mark Hughes Aad Groenenboom Global Utilities Leader European Leader European Leader Energy, Utilities & Infrastructure Advisory Renewable Energy 02 Report highlights Wind lulls while hydro deals flow Solar shines only intermittently With the notable exception of the US, In common with wind, deal-making for where stimulus and tax credit measures solar targets was subdued in 2009 as gave an impetus to activity, 2009 saw a uncertainty and constrained financing big decline in wind power deals. The affected sentiment. Solar deal numbers total value of wind power deals shrank fell 31% - from 181 in 2008 to 124 in 62% from US$16.5bn in 2008 to 2009 – and the total value of solar deals US$6.3bn in 2009 with a third fewer was down 44% to US$3.5bn. However, deals. The wind power deals that did get the solar sector is attracting a series of announced were for much smaller values acquisitions by larger more cash-rich - average wind deal value was down industrial companies as larger players 44% year-on-year. In contrast, both total extend their reach in the renewables value and average hydro deal value powered chain. Notable moves of this kind include forward – with total value up 50% from Bosch's acquisitions of majority stakes in US$10bn to US$15bn and average German solar module maker Aleo Solar hydro deal value nearly doubling. The and thin-film solar modules company share of hydropower in total renewables Johanna Solar Technology and Siemens’ deals value rose commensurately - from US$418 million acquisition of Solel Solar 26% in 2008 to 45% in 2009. In Systems. contrast, wind power deal share fell from 42% to 19%. 03 A growing slice of the power sector Utilities and financial buyers deliver the most deal value The buoyancy in hydro deals meant that Deal-making is being driven by a range the overall decline in renewables deals in of types of buyer. Utility companies 2009, although marked in the wind and were on the buy-side in a growing solar sectors, was not as steep as that share of the 2009 deals – 42% of all experienced in the wider power sector. deals, accounting for 55% of total While the value of non-renewable power renewables deal value. The need to deals (electricity and gas deals excluding bulk up in renewables is a key driver renewables deals) fell 50% year-on-year, for utility companies alongside more the decline in renewables deal value was specific individual deal motivations 14%. The share of value attributable to such as those affecting the big hydro renewables deals rose from 17% in 2008 deals of 2009 (see ‘deal makers’). to 25% in 2009 – accounting for Infrastructure investors, private equity US$33.4bn of the gas and electricity firms and other financial players sector’s total 2009 US$131.1bn deal continue to show a high level of value. interest in renewables purchases. They were buyers in one in 10 of all deals but accounted for 25% of total renewables deal value. 04 Deal totals: different sectors ebb and flow Renewable energy is accounting for an increasing slice Within the renewables sector, however, different segments of overall M&A activity in the power utilities sector. Deal tell very different stories. For example, there was a big numbers and total M&A value in the sector as a whole decline in wind power deals but an increase in hydro deals. declined significantly in 2009 but the decline in deals In 2008, wind power accounted for the largest slice (42%) for renewable assets or technology was much less of M&A value in the sector but this fell to just 19% in 2009. marked than in the wider sector. The share of total The total value of wind power deals shrank 62% from sector value attributable to renewables deals rose from US$16.5bn in 2008 to US$6.3bn in 2009 with a third fewer 17% in 2008 to 25% in 2009 – accounting for deals. The wind power deals that did get announced were US$33.4bn of gas and electricity’s US$131.1bn total for much smaller values - average wind deal value was deal value. down 44% year-on-year. In contrast, both total and average hydro deal value powered forward – with total value up The US$33.4bn worth of M&A stemmed from 549 50% from US$10bn to US$15bn and average hydro deal renewables deals. The number of renewables deals fell by value nearly doubling. The share of hydropower in total over a third (36%) year-on-year from 2008 to 2009 but renewables deals value rose commensurately - from 26% in average deal size (for deals with disclosed values) rose by 2008 to 45% in 2009. a third (34%) – up from an average of US$45.5 million to US$60.8 million (figure 1). The net effect was a significant A surge in large hydro deals buoyed overall renewables but relatively modest fall in total renewables deal value – deals totals. As we see in the next chapter, five of the 10 down 14% from US$38.9bn in 2008 and much less than largest deals in 2009 involved hydro assets with a spread of the 50% fall in total M&A value for non-renewable power deals in China, Europe, North and South America reflecting assets (see our companion Power Deals report). a variety of deal motivations and circumstances. If we exclude hydro deals from our review, it leaves a very different picture for the rest of the sector – the total value of non-hydro deals fell 36% from US$28.9bn in 2008 to US$18.4bn in 2009 and deal numbers were down 38% from 740 to 460.
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