Global clean tech and power market M&A led in 2024 by electricity generation deals
Energize Weekly, September 11, 2024
Global clean technology and power market mergers and acquisitions have totaled $105 billion with 234 deals so far this year, slightly ahead of the 2023 pace, according to Enverus Research Intelligence.
There were $79 billion in deals in the first half of 2024 and another $26 billion to date in the third quarter.
The level of activity, Enverus said “is a showing of strength for power and energy transition deal markets despite multiple challenges including macro-economic factors like sustained higher interest rates that have raised financing costs.”
Acquisitions in generation and storage assets in North America and Europe are the main driver with a deal value of $32.5 billion through the first half of 2024.
Europe posted $17.1 billion in generation deals followed by North America with $7.4 billion in transactions. Activity in Europe was spurred by its aggressive carbon reduction goals and the movement away from Russian natural gas.
In the U.S., several of the large regional grids have been the main terrain for mergers and acquisitions. These include the Electric Reliability Council of Texas, the Midcontinent System Operator and the PJM Interconnection.
Population growth, increased data center demand, and electric vehicle adoption are projected to increase total U.S. load demand by 42 percent by 2050.
“Overall growth in the load, combined with greater integration of renewable generation assets, is creating unique opportunities in both generation and storage for nimble buyers,” Ian Nieboer, Enverus managing director and head of energy transition, said in a statement.
Solar generation deals saw the most activity in the first half of 2024, accounting for $8.2 billion in announced value. Those were closely followed by offshore wind at $8 billion and onshore wind with $5.3 billion.
While there was a lot of attention to renewable resources, there were also acquisitions for existing gas assets, such as the $3 billion purchase by the private equity firm Quantum Capital Group of the Carlyle Group’s Congentrix Energy.
Quantum acquired more than 5 gigawatts of natural gas-fired capacity, primarily in the PJM where the transition from coal-fired plants to renewable resources has created a demand for natural gas-fired generation to help ensure grid stability.
The mining and raw material sector associated with the energy transition saw the largest decline in deals. Mining mergers and acquisitions dropped to just $1.7 billion in the first half of 2024, compared to $11 billion in the first half of 2023.
That corresponded with a sharp fall in the price of lithium carbonate equivalent from a peak of $81,000 a ton in December 2022 to $12,000 a ton in the second quarter of 2024.
Alternative fuel mergers and acquisitions were also challenged due to the decline in credit pricing in the U.S., which had been the main area for deals. “A volatile environmental credits market has sparked uncertainty in investors’ minds leading to a compression in deal flow in alternative fuels in the U.S.,” Nieboer said.
Still, a large investment by KKR in European biorefining and biomethane assets kept alternative fuel deal value relatively flat at $2.2 billion in in the first half of 2024 compared to $2.7 billion through the first six months of 2023.
International investment by firms like KKR underscores the global nature of energy transition, Nieboer said, which enables investors to take advantage of differing policy priorities and incentives among regions and thereby reduce risk.
“Looking forward toward 2025, we see continued strength for power market deals on the back of U.S. load growth and potential tailwinds from the macro-economic environment as the Federal Reserve pivots to rate cuts,” added Nieboer.
