Mergers and Acquisitions (M&As) in Renewable Energy in North America


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Mergers and Acquisitions (M&As) in Renewable Energy in North America

  1. 1. Mergers and Acquisitions in Renewable Energy in North America Engineering a Brighter and Greener Future 2012NA37- F1
  2. 2. Executive SummaryNA37-F1 2
  3. 3. MethodologyFrost & Sullivan’s market research methodology was designed to provideessential research to our clients to help them capitalize on market opportunitiesand gain a competitive advantage in the marketplace. Our team of analysts usesprimary research as the main tool and, combined with secondary resources,create “bottom-up” market sizes and forecasts. Through this approach, each finalmeasurement represents the product of all the figures from a micro to macro level.Primary Research:For the purpose of this study, Frost & Sullivan has conducted telephone interviewswith utilities, project developers and original equipment manufacturers (OEM). Theinterviews target chief executive officers, chief technical officers, businessdirectors, marketing directors, and strategy leaders from various companies andinstitutions across the renewable energy market.Secondary Research:Frost & Sullivan conducted an extensive review of all the existing information Source: Frost & Sullivan Analysisavailable. Some of the sources used are:•Frost & Sullivan past publications and internal databases•Trade press and associationsForecast MethodologyBased on primary interviews, factors that are expected to drive and restrain the market in terms of revenue are identified.These market drivers and market restraints are analyzed over the short term (1 to 2 years), medium term (3 to 4 years), andlong term (5 to 6 years). Forecasts are estimated by assigning weights to the drivers and restraints according to the timeframe. The time frame analysis directly affects market forecasts, development of market strategies, and investment timing byindustry participants. Finally, the forecasts are matched to the leading economic indicators and drivers for the industry.NA37-F1 3
  4. 4. Market Scope and Segmentation Scope • This research service analyzes the mergers and acquisitions (M&A) deals in the renewable energy market with special focus on North America. • The base year for this study is 2011 and the study period is 2005-2011. • This study considers deals in solar technologies that are used for power generation, and excludes other applications. • Deal values are stated as the consideration value announced or reported, including any assumption of debt and liabilities. Figures relate to the actual stake purchased and are not grossed up to 100 percent. SegmentationIn this research service, the renewable energy market is segmented based on the source from which the energy is derived. Adetailed analysis of the investment deals from an investment perspective and the underlying strategy is given for thefollowing:• Solar energy• Wind energy• Biofuels energy• Geothermal energy• Marine/hydroelectric energyNA37-F1 4
  5. 5. Venture Capital Investment Attractiveness Renewable Energy Market: Venture Capital Investment Attractiveness, North America, 2011 Quadrant I: Prevent/Innovate Maximum VC investment; prevent competition by increasing investment in innovation Quadrant II: Partner/Innovate II Geothermal I Level of Attractiveness Biofuels Many challenges exist but can be Marine/Hydro overcome by several technology Solar developers partnering with each other Quadrant III: Stay Away Wind Not recommended for VC investment; “dead technologies” III IV Quadrant IV: Protect/ Innovate Consolidated market, VC exhausted; need for investing in technological breakthrough to control rise in sunk costs 0 Probability of SuccessParameters considered for X axis: Capital costs, demand, legislative environment, barriers to entryParameters considered for Y axis: R&D efforts, challenges Source: Frost & Sullivan analysis NA37-F1 5
  6. 6. Strategic Objectives Scope of Study QuestionsThis study includes analysis of all the renewable energy and clean technology 1. Which sectors are showing theM&A deal activity in North America. This report examines the rationale behind most promise?the overall trends and the key individual deals in the renewable energy sector. 2. Which countries have the mostFrost & Sullivan defines renewable energy deals as those relating to these congenial environment for thesectors: solar, wind, biofuels, biomass, geothermal, hydroelectric, and marine. success of potential M&A deals?Renewable energy deals relate to the acquisition of: 3. What type of investment should• Operating projects involved in the production of renewable energy the investor make?• Companies manufacturing equipment for the renewable energy sector 4. What is a fair value of acquisitionWe also deal with five case studies specific to the M&A activity in North for a company?America. 5. What are the factors driving the M&A market? 6. When should an investor invest in these technologies and what is a good time frame of investments?NA37-F1 6
  7. 7. ConclusionThis slide is a snapshot of the various parameters to consider for M&A deals in the North American renewable energymarket. Drivers/Restraints Historic/Current Trends • Regulatory policy varying by country • Lower GHG through renewables • Environmental support continues • Demand leads to production • Innovation in technologies leads to better • M&A deals tending to more deals of synergies smaller values • Return of capital markets promotes • Consolidation may happen significantly PE investments in solar and biofuels • Limited resources such as arable • Solar deals are growing the fastest land affect biofuels • Higher initial investments M&A Deals in • Unfair trade practices Renewable Investment Avenues Energy Market Future Outlook • VCs enter post-regulation • R&D leaders such as California, • Sectors such as solar and biofuels Michigan to benefit showing high promise • High commodity volatility implies • Enhance the value chain asset management firms refrain • Progressive governments need to • Producers are protected in Canada, look at safeguarding interests Texas, etc., hence asset management through transparent tariffs firms may enter. • Technology as a differentiator • Effective asset management plays an important role in value creation NA37-F1 7
  8. 8. Contact Britni Myers (210) 477-8481 britni.myers@frost.comNA37-F1 8