Unstable RECs lead to 60% investment drop: report

Hydro deals lead the way in the renewable M&A market. The Three Gorges dam in China was the biggest renewable deal made in 2009. The second edition of PwC’s 2009 Renewable Deals: annual review of mergers and acquisitions activity within the global renewable power market, released Thursday, shows green deals fell by 59% year-on-year in Australasia, from 29 in 2008 and to just 12 last year. The total value of M&As dropped 69% from $357 million in 2008 to $111 million last year.But PwC partner Andrew Petersen said he expected 2010 to record a big upswing in the number and value of renewables deals.”You could view these results as Australasia being a laggard, or you could view it as us about to come into our own,” he said. ”We now have clearer price certainty around regulatory framework with renewable energy certificates.”The investment community is seeing confidence at the big end of the energy retailing sector, with AGL and Origin growing their portfolios.Petersen concludes that Australia’s growing mix of renewables options will reflect the country’s natural advantages, and “over the next five to 10 years it really has to be wind, solar and geothermal”. Overall, total renewable energy deals fell from 856 in 2008 to 549 in 2009, a fall of one deal a day, while the share of all renewables deals from the Australasia region in 2009 amounted to 0.3% of total energy deals, the second-last place followed by the Russian Federation, with 0.1%.Five of the top 10 renewables deals in 2009 involved hydro assets, helping the segment increase its total proportion of the renewables pie from 26% to 45%. The biggest deal was done by China’s Yangtze Power, which purchased hydro asset Three Gorges Industry for $5.9 billion. No Australian deals made the top 10 in the region.When hydro deals are excluded from the overall report findings, it leaves a very different picture for the rest of the sector – the total value of non-hydro deals fell 36% from $US28.9 billion in 2008 to $US18.4 billion in 2009, with deal numbers down 38% from 740 to 460.Wind power also fell out of favour with investors, toppling from 42% of deals in 2008 to 19% in 2009.Story courtesy EnvironmentalManagementNews.net

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