The value of global mergers and acquisitions in the renewable energy sector reached a record £118.7 billion in 2022 – a rise of 57% on the previous year, according to new research by business advisory firm Dow Schofield Watts.
The figures show that the number of deals completed during the year increased by 63% to 1,036, as the high price of fossil fuels due to the war in Ukraine and pressure to meet net zero targets continued to drive investment and global M&A activity.
The two biggest deals during the year were both acquisitions by BP, which paid over £10 billion for a minority stake in the Asian Renewable Energy Hub in Western Australia, and over £3.5 billion for the US renewable natural gas operator Archaea Energy Inc.
Other key deals included Ørsted’s sale of a 50% stake in Hornsea 2, the world’s largest offshore wind farm which lies off the Yorkshire coast, to a consortium including AXA, SAS Rue La Boetie and Credit Agricole Assurances for £3 billion; and EDF Renewables’ acquisition of the Neart na Gaoithe wind farm in the Firth of Forth for £2.7 billion.
Dow Schofield Watts says the figures highlight a number of key trends. Investment in renewables is no longer being driven by subsidies and tax relief but by pressure to meet net zero and increased potential returns backed by growing consumer demand. With rising fossil fuel prices, renewables have become an increasingly attractive proposition and are popular with an ever greater number of investors.
Meanwhile investment in renewables is no longer restricted to capital intensive infrastructure. There is a whole range of new associated technologies and services – from smart meter infrastructure, smart grid technology, energy efficiency services, energy storage and EV charging – which bring together physical and digital infrastructure to create a highly synchronised market.
According to the International Energy Agency, renewables will overtake coal as the primary energy source for global electricity generation by 2025. Electricity generated from renewables is expected to increase by almost 60% to over 12,400 TWh by 2027, accounting for almost 40% of all electricity generation.
DSW estimates that the global renewables market could almost treble in size and be worth almost £2 trillion, with almost 3,000 deals annually, by 2030.
