Market insight: Renewable energy

Unsurprisingly, given its environmental importance, the renewable energy industry is experiencing unprecedented growth – and its M&A landscape remains especially vibrant.

The global push from every quarter for decarbonisation, energy security and the transition to sustainable energy sources has triggered a huge surge in UK company sales activity within this rapidly burgeoning sector.

Acquirers are not only targeting companies which specialise in traditional renewable assets but also those that develop innovative technologies in support of grid stability and energy efficiency.

At KBS, we have completed numerous transactions within the renewable energy industry, including the sales of IMS Heat Pumps, Cotswold Energy Group and Chiltern Solar, as well as substantial private equity investment into Project Better Energy.

In advising on those deals, and sustaining our outreach processes in the sector, here are some recent trends we have noted:

• Increased investment: There is a strong appetite for investments in offshore wind, energy and solar storage as companies look to expand their portfolios in line with net-zero goals.
• Strategic partnerships: Many companies are forming strategic alliances to share resources and expertise, particularly in technology development and project financing.
• Private equity involvement: PE firms are increasingly investing in renewables to seek stable long-term returns in the growing energy transition sector.
• Regulatory support: Government policies and incentives aimed at boosting renewable energy have created a more favourable environment for M&A activities.
• Acquisition of offshore wind assets, solar projects and energy storage: Major energy companies such as Orsted and EDF have been acquiring smaller firms or projects to expand their offshore wind capacity. For example, Orsted’s acquisition of several smaller UK-based offshore wind projects has solidified its position as a market leader. Companies such as NextEra Energy and Canadian Solar have been actively buying solar farms in the UK, capitalising on the growing demand for solar energy solutions, whilst the rise of energy storage as a key component of renewable energy has led to several acquisitions. Notable companies are looking at firms specialising in battery technology and grid solutions.

What is the economic appeal of renewable energy to investors?

• The cost of solar panels has dropped over 80% since 2010. Solar is now the cheapest source of new electricity in many parts of the world.
• The cost of wind power has also fallen by around 50% over the last decade.
• Improvements and falling costs in battery technology have made renewable energy storage feasible.
• Government policies, incentives, rebates and renewable energy targets have helped to drive growth in this sector.
• Investing in renewable energy mitigates the huge economic costs and risks associated with climate change, potentially saving the global economy trillions. To reach net-zero by 2050, the International Energy Agency estimates that global investment in clean energy alone will need to more than treble by 2030.

Did you know…?

In a recent survey, 46% of energy leaders disclosed they are planning for acquisition or divestment in the next 12-18 months to help achieve strategic goals and accelerate investment.

Why would an acquirer or investor be interested in my company?

If you are an owner or shareholder of a renewable energy company and remain unsure about its appeal, notwithstanding everything we have set out above, here is a reminder of the key value drivers.

• MOTIVES
  • Market Expansion: To increase market share or enter new geographical areas
  • Portfolio Diversification: Addition of renewable assets reduces reliance on fossil fuels
  • Access To Technology: New technologies or operational expertise enhances competitiveness.

• SYNERGIES
  • Operational Effiencies: Can be improved, and costs reduced, by combining resources 
  • Shared Infrastructure: Operations can be streamlined by utilising existing grid connections and supply chains, for example
  • Cross-Selling Opportunities: Customer bases can be leveraged to offer new renewable solutions

• STRATEGIC INTERESTS
  • Sustainability Goals: Aligning targets enhances reputation and compliance with regulatory frameworks 
  • Regulatory advantages: Acquiring a renewable energy company can trigger favourable regulatory treatment and government incentives
  • Long-Term Growth: Can be achieved sustainably amid shifting energy trends

We have a retained register of active buyers seeking high-quality opportunities in the renewable energy sector, which includes private equity firms and institutional investors.

The appetite and strategic motivations to acquire remain extremely strong due to the promise of growth, sustainability and strategic alignment with global energy trends.

The increasing focus on environmental, social and governance (ESG) factors makes renewable energy companies extremely attractive investment and acquisition opportunities.

If you are the owner of a renewable energy company or an acquirer interested to know more about the opportunities in this sector, contact us through this website, with complete discretion assured, to gain further information.