KBS - Renewable Energy - Market Insight

CURRENT LANDSCAPE

As of late 2024, the M&A landscape remains vibrant , with ongoing negotiations and new partnerships emerging. Companies are looking not just at traditional renewable assets but also at i nnovative technologies that can support grid stability and energy efficiency . The focus on achieving the UK’s climate goals continues to drive strategic moves within the sector.

In the UK renewables sector, acquirers, investment buyers, and private equity firms have distinct motives, synergies, and strategic interests driving their decisions.

As an investor, the economics of renewable energy are becoming increasingly appealing:

• The cost of solar panels has dropped over 80% since 2010. Solar is now the cheapest source of new electricity in many parts of the world. • The cost of wind power has also fallen by around 50% over the last decade. According to Lazard, a leading financial advisory firm, wind and solar are now the two cheapest sources of new electricity generation in the U.S. • Battery technology. Improvements and cost declines in battery technology have made renewable energy storage possible.

• Government policies, incentives, rebates, and renewable energy targets have helped drive growth in the renewable energy market. Over 150 countries have renewable energy targets and policies in place. • There is increasing recognition that climate change poses huge economic costs and risks. Investing in renewable energy mitigates these costs and risks. A transition to renewable energy could save the global economy trillions of dollars according to some estimates.

TRADE/STRATEGIC ACQUIRERS

MOTIVES

SYNERGIES

STRATEGIC INTERESTS

Market Expansion: Acquirers often seek to expand their market share or enter new geographical markets. Portfolio Diversification: Diversifying their energy portfolios by adding renewable assets reduces reliance on fossil fuels. Access to Technology: Gaining innovative technologies or operational expertise enhances competitiveness.

Operational Efficiencies: Combining resources can lead to cost reductions and improved operational efficiencies. Shared Infrastructure: Utilising existing infrastructure (e.g., grid connections, supply chains) can streamline operations. Cross-selling Opportunities: Companies may leverage their customer base to offer new renewable solutions.

Sustainability Goals: Aligning with corporate sustainability targets enhances reputation and compliance with regulatory frameworks. Regulatory Advantages: Being involved in renewables can offer favourable regulatory treatment and government incentives. Long-term Growth: Investing in renewables is often seen as a path to sustainable long-term growth amid shifting energy trends.