Cleantech Investor

Published in: 2011 - A Review of Cleantech Equity Deals, January 2012

Under the shadow cast by the Fukushima nuclear accident early in the year, consolidation gathered pace in the utility sector in 2011. With stock markets at depressed levels, in Europe Iberdrola and EDF each acquired their respective listed renewable energy subsidiaries – and the cash-strapped Portuguese Government sold a stake in EDP to China Three Gorges. In the US, although not strictly renewable, energy deals announced included the US$16.2 billion plan to acquire Progress Energy (PGN) by Duke Energy Corp (DUK). That deal failed to gain approval before the end of 2011, but others were approved by the regulators – significantly, sometimes in exchange for commitments to invest in renewable energy. This was the case in the US$8.05 billion takeover by Exelon Corp (EXC) of Constellation Energy Group Inc. (CEG), which agreed to develop 180MW of wind and solar generating capacity.

Meanwhile, niche stock market quoted renewable energy generators, lacking support from institutional investors, were forced into alternative funding deals. The acquisition of a majority stake in Brazil’s Renova Energia by Light, and the sale of the US offshore SeaEnergy Renewables unit to Spanish oil company Repsol are cases in point.

Private equity investors also homed in on the solar market in 2011, with Terra Firma setting a record price for an acquisition of Italian solar assets and KKR investing alongside Google in a California PV project.

2011 was a “blockbuster year for debt funding” in the wind industry, which amounted to US$11 billion compared to US$1.8 billion in 2010, according to figures from the Mercom Capital Group. This surge in lending was accounted for in large part by a US$5 billion credit facility from the China Development Bank (CDB) to Ming Yang (which has a partnership with Three Gorges New Energy for offshore wind), for development outside of China. China’s Goldwind Science & Technology also received US$1.6 billion in credit. One of the first western developers to receive non recourse lending from the CDB was Mainstream Renewable Power, for a project in Chile using Goldwind turbines. Two other notable debt deals were a US$1.9 billion credit facility for Vestas from lenders including Commerzbank and DnB NOR Bank; and a US$1.7 billion syndicated loan received by Gamesa.

There was also extensive activity in terms of equity transactions for project developers, both for project finance and in mergers and acquisitions. China, India and Brazil were amongst the most active markets for wind energy, but European markets were also active. While Google is focusing on solar, a notable non utility player in the wind market was Ikea Group, which acquired a wind farm in Scotland, building upon its renewable portfolio elsewhere in Europe.

Deals