By Jess McCabe
Nuclear power companies could hasten acquisitions in the renewables sector in response to the Fukushima disaster, says consultancy PwC.
UK and French nuclear power and engineering firms have been buying up wind and solar power assets, the consultancy said in a report this week, which found that more mergers and acquisitions in renewables were completed last year, although the value of deals dropped to $33.4 billion from $48.8 billion in 2009.
Ronan O’Regan, director of renewables and clean-tech at PwC, does not believe the still-unfolding disaster in Japan will “raise a red flag to investment in nuclear, [but] it could in the short-term spur further moves by nuclear companies into renewables”.
“The interplay between the nuclear and renewables sectors came into particular focus in 2010 as nuclear companies saw the opportunity to develop their carbon-free offering,” the report says. For example, France’s Areva spent $200 million last year on US solar thermal developer Ausra.
US nuclear generator Exelon also bought John Deere Renewables for $900 million last year. John Deere has 735MW of wind power in operation and a pipeline of 1.4GW.
For both these nuclear specialists, this was their first foray into solar and wind.
Overall, the number of mergers and acquisitions in the renewables sector grew by two-thirds in 2010 to 530, PwC found, but the size of transactions was smaller.
PwC put the reduction in size of renewables deals down to buyers focusing on smaller deals which fill technology gaps and rollout deals as completed projects are sold to financial investors. Spending by utility companies plummeted “in the face of massive capital investment challenges”, the report says, with purchases down to $3 billion in 2010, from 2009 levels of $15.8 billion.
Hydropower deals represented the largest slice in 2009, at 33% in terms of value, but last year saw them drop down to fifth place, with $3.6 billion of deals representing 11% of the total. Wind deals made up the largest proportion of M&A activity last year, although the value of deals was down to $10 billion, from $13 billion in 2009.
Energy efficiency companies became a more attractive target for buyers last year, with the number of deals up 225% on 2009 to 91 – and the value of deals up 63% to $3.8 billion.