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Expect renewable energy mergers in next year, says report

Merger and acquisition activity is likely to increase in the renewable energy sector over the next 12 months – particularly in Europe.

By Isabella Kaminski

A survey by Mergermarket, in association with independent professional services firm Rödl & Partner, found 72% of respondents expected an increase in merger and acquistion (M&A) activity in the renewable sector over the next year. Out of 100 senior M&A practitioners involved in renewable energy surveyed in Q2 of 2011, 67% said they expect Europe to be at the forefront of this increase.

There have been 51 merger and acquisition deals in the global renewable market so far this year, with a total value of €10.6 billion. Iberdrola’s pending 20% stake bid for Iberdrola Renovables is the biggest deal of the year at €2.6bn, followed by Electricite de France’s €1.5bn bid for EDF Energies Nouvelles (50% stake).

According to Mergermarket, the expected increase is partly attributed to Europe’s diverse renewable energy resources. Wind power and solar thermal markets, in particular, are expected to see strong activity over the next year, with biomass becoming more prominent.

Nearly three-quarters of the survey pool (72%) said government support would be a very significant external driver of renewable merger and acquisition deals over the coming year, while 31% believe feed-in tariffs are the most effective government policy for driving investment. Germany’s long-term feed-in tariffs, in particular, were highlighted as an important aid in bolstering renewable investment.

Dr Marcus Felsner of Rödl & Partner Nuremberg says: “Given the dynamic of events earlier this year, the commercial, political and social drive for fossil fuel independence has only further empowered investors, big and small. High transaction activity in this promising sector – both in developed and emerging markets – is poised to continue well into the future.”

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