European energy M&A market likely to be hit by Brexit impact, EY warns

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email
Until the UK’s energy policy and position in the EU energy market becomes clearer, investors could be put off acquiring utility-scale energy generation assets, particularly those in the UK. Credit: National Grid

The European investment market for power generation assets is likely to be severely hit by the continuing impacts of the UK’s Brexit vote, ‘Big Four’ consultancy EY has warned.

However clean energy assets backed by long-term power purchase agreements (PPAs) will remain of particular interest due to their ability to provide stable, long-term returns.

The sentiments were raised in EY’s latest power transactions and trends report, updated for Q2 2016.

Within it, the consultancy has warned that until the UK’s energy policy and position in the EU energy market becomes clearer, investors could be put off acquiring utility-scale energy generation assets, particularly those in the UK.

Since the British public voted to leave the European Union on 23 June there has been substantial uncertainty over how the country will engage with continental Europe and the wider European energy market.

The UK is linked to Europe through various interconnectors, and energy is traded with the continent through them. Various reports published prior to the vote discussed the possibility of tariffs being added to any imported energy, a practice which economics consultancy Oxera warned would add £140 million to household bills.  

EY also warned of the “mixed” regulatory support renewables had been afforded across Europe. While France and Italy have backed solar and other clean generators with fresh targets and support frameworks, Germany and the UK in particular had withdrawn support.

The UK has tumbled down EY’s Renewable Energy Country Attractiveness Index (RECAI) in successive quarters and at the last update occupied 11th position.

But while the outlook for renewable generators in general has been unfavourable, EY did however state that investors had been buoyed by the number of assets backed by long-term PPAs, which it said were able to provide stable, long-term returns.

Appetite for securing PPAs with the UK’s operational solar farms has intensified in recent quarters with the wholesale energy price plummeting, driving interest from asset holders into reducing their exposure to such fluctuations.

Asset owners such as Foresight and Bluefield have pursued PPAs after wholesale energy prices dented their net asset values in the last year. 

Read Next

December 9, 2021
Investment firm KKR has launched a new utility-scale solar and energy storage development platform, dubbed Stellar Renewable Power.
December 2, 2021
Japanese electrical engineering and software company Yokogawa Electric Corporation has acquired all of the outstanding shares of renewable and distributed energy software company PXiSE Energy Solutions LLC for an undisclosed amount
December 2, 2021
Renewables developer BayWa r.e. has acquired Beacon Solar, the solar distribution division of Beacon, and will look to “cross-sell” solar and roofing products in the near future as it continues to expand across the US.
November 30, 2021
‘Solar Module Super League’ (SMSL) member Canadian Solar has raised US$150 million through a share offering, with proceeds set to help the manufacturer expand its energy storage arm.
November 25, 2021
Assurance and risk management provider DNV is acquiring cyber security firm Applied Risk as it looks to build a security practice focused on defending industrial assets against emergent cyber threats.
November 22, 2021
German energy company RWE is selling solar EPC and O&M service provider Belectric to Czech utility CEZ, Germany's federal competition authority has revealed.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
December 21, 2021
Free Webinar
Solar Media Events
February 1, 2022
London, UK
Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal

PV TECH POWER VOLUME 29 OUT NOW—Get 35% off your first year

Solar’s 2030 blueprint