Greentech Lead U.S: The renewable energy sector
in North America is experiencing intense merger and acquisition
(M&A) activity– the number of deals grew by two-thirds year-on-year in
2011, although the total deal value decreased by one-third, from $48.8
billion in 2010 to $33.4 billion in 2011.
New analysis from Frost & Sullivan’s Mergers
& Acquisitions in Renewable Energy in North America research
reveals that this market is estimated to double in 2013 due to increased
interest in alternative energy sources.
“In 2011, the number of deals rose dramatically —
by 58 percent from 2010 in wind and 48 percent from 2010 in solar — but total
values were down by 24 percent in wind and 20 percent in solar,” said
Frost & Sullivan Business & Financial Services Consultant K. Vinod Cartic.
“Investors, developers and operators were extremely busy, but the typical
deal size was smaller.’
For project developers, financing is limited, and
entrants must primarily rely on their own capital. For technology developers,
entry is possible through partnerships with existing research labs.
The renewable energy market is highly competitive and is
moving to a cost-based business model. Its higher capital costs, compared to
conventional energy systems’, reduce its growth potential. Additionally, the
technical skills needed to operate these systems affect the system
installation, as well as the overall costs.
“Companies must resort to effective asset management
to enhance the value chain,” noted Cartic. “Governments can do their
bit to safeguard the industry’s interests through transparent and stable
tariffs and using technology as a differentiator.”