In 2009, the demand for worldwide energy saw its first decline since 1982. However, the combined revenue of the three major sources of alternative energy was $144.5 billion, up 15.8 percent from 2008. Government support, including stimulus packages, helped to boost the global capacity for wind power by 31 percent, solar energy by 47 percent and biofuels by 21 percent.
Additionally, for the first time in 2009, energy smart technologies such as digital energy applications, power saving appliances and electric vehicles attracted more venture capital and private equity investment than any other renewable energy technology. Although the industry faced the 2009 financial crisis in North America and Europe, its long-term growth fundamentals remain intact.
From the second quarter of 2009 through the second quarter of 2010, the industry saw 391 transactions, valued at $20.4 billion in total transaction value, up 54.8 percent in deal value versus the previous period. Solar and wind accounted for nearly 58 percent of total dollar volume for the period. In terms of country, China saw the highest transaction value of $5.4 billion with a total of 23 transactions during the last 12 months.
The U.S. came in second with a transaction value of $2.6 billion from 72 transactions, followed by Spain, the Philippines and India. Among regions, Asia led with a total of 63 transactions, followed by Europe with 183, North America with 110 and the Middle East with 4.
Ketil Wig, chairman of IMAP’s Energy & Power Industry Group, said, "Although investors are cautious, research and development spending by governments and corporations amounted to $24.6 billion in 2009. The cost of clean technologies is decreasing and these technologies are being utilized in more applications. Within the next decade, we expect solar photovoltaic (PV) installations, smart meters, energy storage devices, wind turbines and other clean technologies to become commodities and help the market to mature."
The following are some notable, recent M&A transactions completed by IMAP advisers in the alternative energy industry:
— IMAP represented the Ireland power structure and maintenance company, Shanahan Engineering in its sale to the U.K.-based international energy services company, John Wood Group Plc.
— IMAP represented Denmark supplier for the wind turbines industry, Skykon in its investment in the Swedish private equity fund, EQT Expansion Capital II.
— IMAP advised the Costa Rican wind energy developer and operator, Energias Renovables de Mesoamerica, in its sale to the U.S.-based energy oriented PE fund owned by Actis, Globeleq Americas.
— IMAP advised the Croatian leading systems automation engineering firm, Exor d.o.o. in its sale of selected assets to the Switzerland-based global leader in power and automation technologies, ABB.
"In addition to traditional drivers such as climate change and energy insecurity, we believe that renewable portfolio standards, renewable fuel standards, building codes and efficiency regulations will drive demand for alternative energy," said Richard Wottrich, senior managing director of IMAP’s Alternative Energy Group. "Regulatory certainty is another big driver of renewable energy. For example, China initiated new laws in 2010 that require its power grids to buy power from renewable plants and wind farm, or face very stiff fines. The result has been a huge uptick in investment in the renewable energy sector. As demand increases, we also expect to see new trends in digital energy, hydrogen storage systems, CO2 capture and storage (CCS) and the implementation of nanotechnology to generate alternative energy."
In the future, the growth of energy demand will be largely concentrated in developing economies due to the high demand in these regions. As emerging markets rapidly expand their power generation capacity, IMAP advisers predict they will focus on wind, solar, bio and hydropower.
IMAP periodically conducts reports on all major industries, providing a global perspective on M&A activity for a given period. IMAP’s reports are a result of internal information gathered for completed M&A projects from IMAP’s more than 400 advisers in nearly 30 countries throughout the world, as well as external industry sources.
IMAP is an exclusive global organization of leading merger and acquisition advisory firms. Formed in 1973, IMAP is composed of 45 offices in nearly 30 countries throughout North and South America, Eastern and Western Europe, Australia and Asia. In 2009, IMAP advisers completed 179 transactions, with an aggregate transaction value of more than $6 billion. IMAP advisers provide strategic merger, acquisition, divestiture and related corporate finance services.
Sellers of mid-size companies and corporate acquirers alike rely upon IMAP for essential local market knowledge and industry expertise delivered with unparalleled global reach. Every business day, somewhere in the world, an IMAP adviser is completing an M&A transaction.
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