Global power M&A hits $158 billion in 2018, making it second busiest year in the last five
Energize Weekly, July 17, 2019
Global power mergers and acquisitions (M&A) reached $158 billion in 2018, making it the second most active in the last five years, according to GlobalData, a London-based data and analytics company.
The number of deals was down a little more than 4 percent to 622 for 2018 when compared to 2017, which was the most active year. Acquisitions accounted for 597 of the transactions. Mergers made up the 25 other deals.
“Over the coming two to three years, M&A activity in the power industry is likely to remain strong, backed by a global urge to move away from thermal power towards renewables, although the former will remain relevant,” Sneha Susan Elias, a GlobalData senior power analyst, said in a statement.
The largest announced move in the power industry in 2018 was the acquisition of Innogy by E.ON for $52.9 billion.
The solar energy sector has accounted for the most activity between 2015 and 2019, year-to-date – a total of 661 deals.
Other sectors with significant activity during the same period were transmission and distribution lines – 654 deals; wind – 461; fossil fuels – 305; and hydropower – 214.
Over the last few years, GlobalData said there has been a shift toward sustainable, clean energy activity.
“Power utility companies in mature markets are now witnessing a wave of consolidations, looking to create scale due to the shift towards renewable energy sources, which is pushing them to alter their business models,” GlobalData said.
Consolidation through acquisition is being driven by the inability of some companies to grow organically and also an acknowledgement that companies need to cooperate and collaborate in this transition.
“Power and utility companies are focusing on crucial climate goals and measures in the form of clean energy growth and enhanced natural gas-fired generation to deal with the intermittency issues, safety and security of energy supply, phase-out of coal-fired power plants and nuclear decommissioning,” Elias said. “M&A deals involving renewable energy are expected to rise in the future due to power and utility companies’ transition towards sustainable clean energy.”