Global P&U deals hit USD 256.3bn in 2018, renewables bring 19% - EY

Europe deal value & volume by segment. Source: EY.

February 19 (Renewables Now) - Global power and utilities (P&U) transactions reached a new deal value record in 2018 at USD 256.3 billion (EUR 226.6bn), and 19% of that came from renewables, Ernst & Young (E&Y) calculates.

The global total includes 546 deals, of which 253 involve renewable energy.

The overall deal value was up 28% year-on-year, mainly thanks to a 2.5 times jump in Europe. There, P&U transactions reached USD 126.5 billion in 2018, “an outstanding year for Europe M&A deals” according to Miles Huq, EY Global Power & Utilities Transactions Advisory Leader. The top deal in Europe was the USD-46.6-billion acquisition of Innogy by E.on from RWE.

“While corporates conducted 70% of all transactions and accounted for 80% of total deal value, there was tremendous interest from financial sponsors as well. We also saw the new energy market continue to grow in both scale and importance driven by consumer demand and regulations. As we move into 2019, we expect a continued interest in renewables, energy storage and electric vehicle (EV) infrastructure investments,” Huq added.

The table below contains details on P&U deals per region last year, according to the EY report Power transactions and trends Q42018.

P&U deal value in USD 2018 2017
Europe 126.5 bn 50.3 bn
Americas 98.9 bn 102.2 bn
Asia-Pacific 29.7 bn 46.7 bn
Africa and the Middle East 1.2 bn N/A

Deal value in the US was down 7% year-on-year, but it remained the most attractive target country, with USD 81.4 billion of capital invested in 2018. This includes USD 55.1 billion of domestic transactions and USD 26.3b of inbound activity.

China was the largest outbound investor last year, pouring USD 34 billion in foreign countries, of which USD 32.6 billion were targeted at Europe.

Huq expects growing investment in grid side battery technology in the US, increased focus by utilities in Europe on renewable generation as well as greater investments in EVs and grid-connected energy storage in the EU.

“In 2019, as interest rates increase, macroeconomic conditions hang in the balance and political tensions weigh heavily on investors, we anticipate challenging M&A conditions. The market may shift to favor lenders over borrowers, with an increasing level of sophistication required to identify and secure strategic investment opportunities,” Huq continued.

(USD 1 = EUR 0.88)

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Tsvet has been following the development of the global renewable energy industry for almost nine years. She's got a soft spot for emerging markets.

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