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www.pwc.com/renewablesdeals                              Renewables                              Deals                    ...
Contents    Introduction                                                                                 2    Report highl...
IntroductionWelcome to the third edition of Renewables Deals, an annual review byPwC of deal-making in the renewable energ...
Report highlights    A busy deal sector but    smaller values    The renewables sector is the focus of    lively deal acti...
IPOs flow as Chinesegear up for growthChinese renewables companies arelooking at major expansion with a seriesof IPOs on t...
Deal totals: a busy sector    More deals for smaller values. 2010 was a busy year for                                     ...
Technology and engineering entrants                 Nuclear and renewables interplay               The Areva purchase come...
Solar power plant growth                                In May 2010, First Reserve and SunEdison              Biofuels    ...
Energy efficiency                             Energy efficiency deals are often for            IPO flowEnergy efficiency i...
Deal makers: the 2010 players        The largest deals of 2010 were dominated by a flow of                                ...
In Europe, Enel’s flotation of Enel Green                         Also in Europe, Norwegian metals  Power came as it sough...
Later in the year, Elkem announced that                 Infrastructure operators, such as oil                         Broo...
Deal dialogue:Valuation – the green premiumThe term ‘green premium’ was coined to describe the price, relative to peers,in...
Deal places: a focus on markets worldwide     Deal numbers in all the major regions rose year-on-year (figure             ...
South America                                     2009          2010 % change Value of deals (US$m)                       ...
Deal places: a focus on markets worldwide     Europe                                                                      ...
Elsewhere, deals for more established         Alongside Spain, Italy was a deal hotspot        In a deal that remained pen...
Deal places: a focus on markets worldwide     North America     North America provided the main focus for renewables deal-...
Energy efficiency deals are a major growth      The largest Canadian deal completed in        Another effect of low gas pr...
Deal places: a focus on markets worldwide     Asia Pacific     Asia Pacific was again a relatively small contributor to   ...
PwC-Studie: Erneuerbare Energien - Amerika holt auf
PwC-Studie: Erneuerbare Energien - Amerika holt auf
PwC-Studie: Erneuerbare Energien - Amerika holt auf
PwC-Studie: Erneuerbare Energien - Amerika holt auf
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PwC-Studie: Erneuerbare Energien - Amerika holt auf

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Zürich (ots) - Die Zahl der weltweiten Transaktionen im Bereich erneuerbarer Energien ist im Jahr 2010 markant gestiegen. Gleichzeitig ist der Gesamtwert der Transaktionen gesunken. Vor allem bei der Wind- und der Sonnenenergie heisst der Trend: ... / http://www.presseportal.ch/de/pm/100008191/100622935/pwc

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PwC-Studie: Erneuerbare Energien - Amerika holt auf

  1. 1. www.pwc.com/renewablesdeals Renewables Deals 2010 analysis and 2011 foresightA look at global M&Aactivity in the renewablepower and energyefficiency sectors
  2. 2. Contents Introduction 2 Report highlights 3 Deal totals: a busy sector 5 Deal makers: the 2010 players 9 Deal places: a focus on markets worldwide 13 Europe 15 North America 17 Asia Pacific 19 Looking ahead 21 Contacts 22 Methodology and terminology Renewables Deals includes analysis of all global renewable energy and clean technology M&A deal activity. We define renewable energy deals as those relating to the following sectors: biofuels, biomass, geothermal, hydro, marine, solar and wind. Renewable energy deals relate to the acquisition of (i) operating projects involved in the production of renewable energy and (ii) companies manufacturing equipment for the renewables sector. We define clean technology deals as those relating to the acquisition of companies developing energy efficient products for renewable energy infrastructure. We exclude deals relating to nuclear power assets and deals where only a minority of the business’s activity is in renewables. This year, the analysis is based on transactions from Clean Energy pipeline’s proprietary M&A database, provided by Venture Business Research. This covers both 2009 and 2010 data in this year’s edition. We note that other database providers have been used in previous years. The main dataset in the report covers completed M&A deals only, and excludes Initial Public Offerings (IPOs) and deals which are pending for regulatory, legal or financial reasons. A selection of top pending deals and top IPOs is included separately in the report. The Asia Pacific region is deemed to include Australasia, except where otherwise explicitly stated. 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%. The analysis also includes deals with undisclosed value. Deals where the transaction value is undisclosed are assigned an average transaction value using a methodology derived from Clean Energy pipeline’s proprietary M&A data.1 Renewables Deals 2010 analysis and 2011 foresight
  3. 3. IntroductionWelcome to the third edition of Renewables Deals, an annual review byPwC of deal-making in the renewable energy sector. It sits alongside itscompanion report – Power Deals – and, together, the two publicationsprovide a comprehensive look at trends and the outlook for M&A activityin the power utilities sector. This report examines the rationale There is strong growth in a number of behind the overall trends and the key sectors. We look at the gathering pace individual deals in the renewable of activity in the solar power energy sector. This year we have generation and energy efficiency expanded our analysis to cover the sectors. We examine the changing mix increasingly important field of energy of buyers and sellers as utility efficiency as well as looking separately companies move back from M&A to at important initial public offering concentrate on capital project (IPO) activity. We also highlight, in a investment. We discuss the east-west series of deal dialogues throughout balance of power in the expanding the report, some of the critical issues windpower market and the increasing for companies engaging in deal globalisation of companies in this activity within the sector, drawing on sector. Looking forward, we see a busy our global experience as an adviser to year ahead as some of these themes players in major deals in renewable intensify and governments clarify any energy markets. adjustments of regulatory regimes to match their fiscal constraints. The renewables sector is proving a busy market for M&A. Deal-making is running at very high levels, albeit for smaller values than in previous years. Apart from hydro, which has long been cost-competitive in the marketplace, the pattern of investment Manfred Wiegand and deals in renewables continues to Global Utilities Leader be strongly influenced by regulatory incentives. There is an element of taking stock as some governments review the best way to balance the triple objectives of affordability, security of supply and cleaner energy in a context of tighter public finances. Renewables Deals 2010 analysis and 2011 foresight 2
  4. 4. Report highlights A busy deal sector but smaller values The renewables sector is the focus of lively deal activity. The number of deals has grown by two-thirds year-on-year although total deal value is down by a third. Europe in particular, and the Asia Pacific region, led the trend towards more but smaller deals. In North America total deal value was more resilient. Indeed, target value in North America target value increased US$3.9bn (43%) year-on-year while Solar power plant and Europe went in the opposite direction energy efficiency sectors with an US$18bn (58%) fall. come of age Solar deal volume is rivaling wind, each with just under a third share of all renewables deals, as momentum behind the sector gathers pace. A series of solar technology and operational asset deals reflects the growing role of solar power plants. Energy efficiency is also becoming a deal hot spot. The number of energy efficiency deals grew 225% year-on-year and total value was up 63%. Two-thirds (65%) of worldwide energy efficiency deal value is in North America where efficiency is second only to wind in total value terms.3 Renewables Deals 2010 analysis and 2011 foresight
  5. 5. IPOs flow as Chinesegear up for growthChinese renewables companies arelooking at major expansion with a seriesof IPOs on the Hong Kong stock exchangein 2010 and more planned in 2011.Chinese wind turbine companies Sinoveland Xinjiang Goldwind will provideformidable competition for westernmanufacturers such as Vestas, Gamesa,GE and Siemens. The IPO proceeds willenable them to expand their pipelines aswell as strengthen R&D to compete inglobal markets for the next generation of Utility companies take6 MW+ turbines. Elsewhere in the wind a back seatsector, the days of independent operatorslook increasingly numbered as operators We predicted in last year’s report thatsuch as Clipper Windpower get taken over utility companies, who have been theby large multinational companies. biggest buyers of renewables assets in the past, might reign back purchases in the face of massive capital investment challenges. This has proved to be the case. Purchases by power utility companies were down significantly – from US$15.8bn in 2009 to US$3.0bn in 2010. Enel’s IPO of its Enel Green Power unit was the biggest 2010 utilities deal but, in an interesting reversal, Iberdrola announced in March 2011 that it intended to delist Iberdrola Renovables by buying back the 20% stake that it floated in 2007. Valuation is not the only motive here. The move was followed by an announcement that Iberdrola is also gaining investment from a division of Qatar’s sovereign wealth fund and forming a strategic partnership in a move that will change the balance of large investor interests in the company. Renewables Deals 2010 analysis and 2011 foresight 4
  6. 6. Deal totals: a busy sector More deals for smaller values. 2010 was a busy year for This reflects a greater focus on smaller renewables deal-making with the number of deals rising by two- deals to fill technology gaps and more roll- out deals as completed projects are sold to thirds year-on-year, from 319 in 2009 to 530 in 2010 (figure 1). financial owners. Utility companies But this was accompanied by a big fall in total value, from reigned back purchases in the face of US$48.8bn to US$33.4bn. Just over a third - US$5.7bn - of this massive capital investment challenges. US$15.4bn fall in value can be attributed to two fairly There were relatively few big portfolio exceptional large European sales by Endesa and E.ON in 2009 additions. Purchases by power utility that boosted that year’s total. companies were down significantly – from US$15.8bn in 2009 to US$3.0bn in 2010 (see figure 4). Power utilities, and other A year-on-year US$12.5bn fall in investors, will also be taking stock of hydropower deal value was a major factor regulatory reviews in some European in the lower deal value transacted in the countries including Spain, Germany, Italy sector. There were a number of large deals and the UK. for hydro assets in 2009 but this was not repeated to the same extent in 2010. From a low base, the biggest sector growth Instead, hydro followed the trend in the came in the field of energy efficiency rest of the sector with a larger number of where deal numbers rose 225% and total small deals (figure 3). Only two hydro deal value was up 63% year-on-year. We deals feature in the top ten deals look at this activity in more detail later in (figure 7). this section. We also examine the dynamics behind the biggest deals in our It was in the wind and solar power sectors ‘Deal Makers’ section. that the pattern of more deals for smaller values was most evident. These continue to Behind the deal totals lie a number of be the largest sectors in terms of the themes, reflecting significant change in the volume of deals. The number of deals rose industry. We examine these on the dramatically – by 58% in wind and 48% in following pages. solar – but total values were down, by 24% in wind and 20% in solar (figure 3). Investors, developers and operators were extremely busy but the typical deal size was smaller. Figure 1: All renewables deals by value (US$bn) and number of deals 2009 2010 Change in 2010 Number Value Number Value % number % value 319 US$48.8bn 530 US$33.4bn 66% (32%)5 Renewables Deals 2010 analysis and 2011 foresight
  7. 7. Technology and engineering entrants Nuclear and renewables interplay The Areva purchase comes in anticipationWe are seeing engineering, technology and Power engineering companies with long of a growing market for the construction ofchemicals companies stepping up their track-records as suppliers in the generation concentrated solar power plants. It followspresence in the renewables value chain, sector are establishing and extending their moves by other engineering groups such aseither by diversifying and entering the presence in renewables. The interplay Siemens who bought Israel’s Solel, amarket for the first time or by between the nuclear and renewables manufacturer of solar thermal systems, instrengthening and extending existing sectors came into particular focus in 2010 2009. In the US, the interface between thepositions. In one of the top ten deals of as nuclear companies saw the opportunity nuclear and renewables sectors was also2010, for example, chemicals company to develop their carbon-free offering. the territory for a major landmark dealChina Bluestar acquired Norwegian maker French nuclear engineering company with nuclear generator Exelon’s first moveof solar-grade silicon Elkem (see ‘Deal Areva, for example, made its first move into renewables through the purchase ofMakers’ section for more details). into the solar power market with the John Deere Renewables (see later ‘Deal US$200m purchase of US company Ausra, Makers’ section). The nuclear emergencyOn the technology front, Sharp’s US$305m a developer of solar thermal power in Japan, which is just unfolding as we gopurchase of US company Recurrent Energy technology. to print, could prompt furtherexpands its photovoltaic (PV) footprint. diversification by nuclear companies intoSharp has long had a solar manufacturing renewables.presence but the deal extends itsoperations from developing and producingsolar panels to developing and marketingpower generation plants. This also reflectssolar PV manufacturers’ increasing need tosecure distribution through in-housedevelopment - a well-established strategyof turbine manufacturers in the windsector. The timing of the move comes asthe roll-out of larger-scale solar generationgains momentum.Figure 2: Quarterly tracking of deals – 2009 and 2010By value (US$bn) By number 20 200 173 15.4 15.8 15 150 142 11.3 11.5 117 10.5 10 100 97 95 98 80 6.3 6.4 5.1 47 5 50 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2009 2010 2009 2010Figure 3: Renewables deals total deal value and percentage share by sector(Deal numbers shown in parenthesis)2009 (US$48,799m) 2010 (US$33,416m) Hydro (US$16,114m) 33% (14) Wind (US$10,057m) 30% (160) Wind (US$13,171m) 27% (101) Solar (US$9,176m) 27% (146) Solar (US$11,536m) 24% (99) Biofuels (US$4,055m) 12% (40) Biofuels (US$3,985m) 8% (39) Energy efficiency (US$3,798m) 11% (91) Energy efficiency (US$2,324m) 5% (28) Hydro (US$3,573m) 11% (33) Biomass (US$1,001m) 2% (24) Biomass (US$2,214m) 7% (46) Geothermal (US$668m) 1% (14) Geothermal (US$542m) 2% (14) Renewables Deals 2010 analysis and 2011 foresight 6
  8. 8. Solar power plant growth In May 2010, First Reserve and SunEdison Biofuels Alongside the entry of power and announced the creation of a joint venture In the biofuels sector, oil and gas technology companies, companies in the for the acquisition of SunEdisons PV companies have been making significant solar power industry have started to projects. The US$362m Rovigo deal was ethanol investments in their search to consolidate and strengthen their global the first of what is expected to be a series diversify transport fuel sources. We discuss presence. For example, US company of transactions as projects are completed. the largest deal of 2010 – Royal Dutch SunPower bought European power plant Shell’s US$1.6bn partnership with Cosan – developer SunRay Renewable Energy for Private equity (PE) investment in the in the Deal Makers section. It was not US$277m. SunPower has already been sector has also followed the scent of Italy’s alone. The Shell initiative followed an very active in solar power plant feed-in tariffs. In one of the largest deals earlier 2008 investment in biofuels by BP development in Italy and the purchase of announced in 2010, UK PE firm Terra when it created Tropical BioEnergia along SunRay gives it added capacity and a Firma paid US$933m for solar photovoltaic with two Brazilian agribusiness and sugar pipeline of developments in Europe and developer Rete Rinnovabile from Terna, and ethanol companies. As we go to print the Middle East. the Italian grid operator. Rete Rinnovabile in March 2011, BP has announced a is targeting total capacity of 150 MW by further investment in the Brazilian ethanol Italy has been a hotspot for solar the time of completion of the deal on 31 sector with the purchase of a US$680m investment, in response to an attractive March 2011. 83% share of bioethanol and sugar subsidy regime and in November 2010 saw producer Companhia Nacional de Acucar e Europe’s largest single-operating But, in a move that has unsettled investors, Alcool (CNAA). Earlier in 2011 Petrobras, photovoltaic solar power plant go live. The the Italian government announced in Brazil’s national oil company, was reported 70 megawatt (MW) photovoltaic power March 2011 that the existing solar power to be considering a stake in a local ethanol plant is near the town of Rovigo in north incentives, which were originally intended producer but, at the time of writing, the east Italy and was developed by US to run until 2013, will apply only to reports have not been confirmed. company SunEdison. photovoltaic plants that connect to the grid Transport accounts for around 21% of all by the end of May 2011. A new support carbon dioxide emissions and the potential In an arrangement typical of solar power scheme is to be introduced for solar plants for ethanol as an alternative fuel is plant financing, the power plant was that connect to the grid after June 1 2011. immense. acquired by financial investors post- This is expected to set an annual cap on development, in this case energy private the cumulative capacity eligible for equity and infrastructure investment firm incentives. First Reserve. Figure 4: Renewables deals by acquirer type – 2009-2010 2009 2010 Number Value (US$m) % number % value Number Value (US$m) % number % value Alternative energy 70 13,654 35% 32% 79 7,341 40% 31% Diversified 22 2,672 11% 6% 31 4,119 16% 18% *Financial 45 6,184 23% 15% 42 5,111 21% 22% Other 32 3,953 16% 9% 28 3,901 14% 17% Utility 31 15,771 16% 37% 20 3,013 10% 13% Total 200 42,234 100% 100% 200 23,485 100% 100% *Financial includes infrastructure and private equity funds Note: based on the largest 200 deals by value, representing over 70% of total deal value in 20107 Renewables Deals 2010 analysis and 2011 foresight
  9. 9. Energy efficiency Energy efficiency deals are often for IPO flowEnergy efficiency is an important growth smaller values or undisclosed sums. In an There has been a strong flow of IPOs in thearea for a diverse range of companies in example of the latter, French glass and renewables sector, dominated by Chineseconstruction, engineering, technology and building materials company Saint-Gobain companies going public on the Hong Kongother sectors. Moves to make the acquired 50% of US company Sage exchange but also, in 2010, the US$3.4bnconstruction of buildings more energy Electrochromics. Activated by a low- flotation of Italian power company Enel’sefficient, gain power management voltage current, electrochromic glass green energy arm, Enel Green Power. Thisefficiencies through a convergence of adapts its light and heat transmission – IPO flow is not included in our main dealenergy and communications technology, and so its tint – to the level of sunlight and totals data but we look at the biggest IPOsand develop smart grids are all spurring the building’s ambient temperature, separately in figure 5 and discuss the Enelactivity. Energy efficiency transactions without hindering external visibility. It and the Chinese deals in the ‘deal makers’doubled their value share of all renewables significantly reduces the amount of energy and Asia Pacific sections.deals between 2009 and 2010 (see figure consumed for air conditioning, heating3), accounting for US$3.8bn of deals out of and lighting. Saint-Gobain and Sage intendthe US$33.4bn total of all deals. to build the worlds first large-scale electrochromic glass plant in Minnesota,Energy efficiency is a growth sector US.around the world but particularly in NorthAmerica, where the energy savingspotential is among the biggest in theworld. Reflecting this, the majority ofenergy efficiency deals are NorthAmerican, with a total value of US$2.5bnin the region comprising around two thirds(65%) of worldwide energy efficiency dealvalue. The largest energy efficiency dealwas the US$300m purchase of energymanagement service provider The LincGroup by facility services company ABM.The deal comes as new building codes thataim to deliver a 30% energy saving frombuildings are being introduced in the US. 2010 review… …Smaller independent companies are slowly being squeezed out of the wind turbine market as big players, such as GE, Siemens and Vestas, compete globally. In 2010, Clipper Windpower was bought by UTC. The centre of gravity of the sector is also tilting between east and west. In an iconic move, Vestas announced the closure of some production facilities in its homeland of Denmark. A few months later it opened a wind technology R&D centre in Beijing to spearhead innovation in wind technology. The centre builds on Vestas’ already-established manufacturing, sourcing and sales operations in China... 2011 view… …Both the east-west centre of gravity and the future of smaller independent wind turbine companies will be affected by developments following the IPOs of Chinese turbine manufacturers Goldwind and Sinovel. The sector will be watching to see the extent to which the IPO proceeds will be used for international expansion. Acquisition of independent companies could be a route to expansion in a sector where the costs of transporting large components inhibits the ability to use a single manufacturing hub. Renewables Deals 2010 analysis and 2011 foresight 8
  10. 10. Deal makers: the 2010 players The largest deals of 2010 were dominated by a flow of In the US, the US$900m purchase of John renewables flotations (see figure 5). The largest was Italian Deere Renewables by nuclear power generator Exelon has significance in the company Enel’s US$3.4bn spin off of its green energy arm. But evolution of windpower and its integration the bulk of IPO deal flow involved Chinese renewable power into mainstream power generation. John companies, with flotations on the Hong Kong stock exchange Deere Renewables’ roots lie in its parent which we discuss in the later Asia Pacific section. China also company’s farm machinery business and featured in the largest solar deal, China National Bluestar’s the development of early windpower using US$2.1bn move for Elkem, a Norwegian manufacturer of solar- small-scale farm turbines. It has grown to include 36 completed projects in eight grade silicon. This deal remained pending at the year end. states with an operational capacity of 735 MW. About 75% of its output is sold under The list of completed deals was headed by The Shell/Cosan transaction is the first long-term power purchase agreements but two highly significant deals – Royal Dutch step in a joint venture. The two companies Exelon will also gain access to Shell’s US$1.6bn deal with Brazilian say that the alliance will enable them to approximately 1,400 MW of new wind ethanol producer Cosan and US power establish a scalable and profitable position projects that are in various stages of generator Exelon’s entry into windpower in sustainable biofuels – one of the development, including 230 MW in with the US$900m purchase of John Deere solutions to take carbon out of the advanced stages of development. Renewables (figure 7). Both deals transport fuels sector over the next twenty represented landmarks of different kinds years – by building a competitive position Exelon has long been a proponent of in the biofuels and wind sectors. Shell’s in the most efficient ethanol producing nuclear power as a low carbon option but US$1.6bn alliance with Cosan is a major country in the world and by exploring the deal is its first move into owning and move in the quest by petrochemical opportunities to produce and sell ethanol operating wind projects. It gives the companies to take carbon out of transport and sugar globally. company more options for future growth fuels. given the lack of momentum in US nuclear power development. Elsewhere in the US, another large power generation company, NRG Energy, also expanded its renewable portfolio (see North America section).Figure 5: Top five renewable energy IPOs – 2010No. Value of Date Company Country Exchange Market Type of transaction announced sector purchase (US$m) 1 3,402 28 Oct 10 Enel Green Power Spa Italy Milan Stock Exchange Diversified Operational 2 1,053 08 Oct 10 Xinjiang Goldwind Science & Technology China Hong Kong Stock Exchange Wind Technology Co. Ltd 3 643 17 Dec 10 China Datang Corporation Renewable China Hong Kong Stock Exchange Diversified Operational Power Co. Ltd 4 426 13 Oct 10 China Suntien Green Energy Corp. China Hong Kong Stock Exchange Wind Operational 5 352 22 Nov 10 Shanghai Chaon Solar Energy China Shenzhen Stock Exchange Solar Technology Science & Technology Co. Ltd9 Renewables Deals 2010 analysis and 2011 foresight
  11. 11. In Europe, Enel’s flotation of Enel Green Also in Europe, Norwegian metals Power came as it sought to reduce debt company Elkem was the seller in two following its acquisition of Spanish power significant 2010 deals. At the beginning of utility company Endesa in 2009. The Enel the year, it completed the US$742m sale of Green Power flotation was oversubscribed some of its hydropower plants to state but was priced towards the bottom of an power companies. Norwegian legislation already lowered price range. The requires that power plants that are more divestment of renewable energy arms has than one-third owned by private owners been a key trend among power companies, must be returned to the state at no cost most notably following the flotation of after 60 years, necessitating the sale of Spain-based Iberdrola Renovables in late such assets before the deadline for 2007. Since then, however, the investment reversion. climate for renewables and the IPO environment in general has become more uncertain. Iberdrola Renovables shares have more than halved since flotation and, as we note in the ‘highlights’ section, the parent company plans a 2011 buy-back of the 20% of shares it does not already own in Iberdrola Renovables.Figure 6: Operational vs technology purchases – 2009-2010* 2009 2010 Number Value (US$m) % number % value Number Value (US$m) % number % value Operational 150 32,968 75% 78% 127 17,645 64% 75% Technology 50 9,266 25% 22% 73 5,840 36% 25% Total 200 42,234 100% 100% 200 23,485 100% 100%*Note: based on top 200 deals by valueFigure 7: Top ten renewables deals 2010 No. Value of Date Target name Target Acquirer name Acquirer Market Type of transaction announced nation nation sector purchase (US$m) 1 1,625 15 Dec 10 Cosan Ltd. Brazil Royal Dutch Shell plc The Netherlands Biofuels Operational 2 900 15 Nov 10 John Deere Renewables LLC USA Exelon Corp. USA Wind Operational 3 742 04 Jan 10 Elkem Energi Lakshola AS; Norway Norsk Vannkraftproduksjon AS Norway Hydro Operational Elkem Energi Siso AS 4 729 04 Feb 10 Waneta Dam Canada British Columbia Hydro and Power Authority Canada Hydro Operational 5 565 09 Nov 10 Comber Wind Farm (166 MW) Canada Brookfield Renewable Power Fund Canada Wind Operational 6 500 29 Jun 10 Cedar Point Wind Energy Project USA Enbridge Inc. Canada Wind Operational (250 MW) 7 440 10 Feb 10 El Andevalo Wind farms (244 MW) Spain Iberdrola Renovables SA Spain Wind Operational 8 414 20 Jul 10 Africana Energía SL Spain Ortiz Construcciones y Proyectos SA, Spain Solar Operational TSK Group 9 389 15 Nov 10 HEAG Sudhessische Energie AG Germany HEAG Holding AG – Germany Wind Operational Beteiligungsmanagement der Wissenschaftsstadt Darmstadt 10 383 16 Feb 10 Energy Developments Ltd. Australia Pacific Equity Partners Australia Biomass Operational Renewables Deals 2010 analysis and 2011 foresight 10
  12. 12. Later in the year, Elkem announced that Infrastructure operators, such as oil Brookfield Renewable Power Fund is a talks were underway for its takeover by pipeline companies, and infrastructure leading Canadian income fund while China Bluestar in a US$2.1bn deal. The investors are getting increasingly involved Enbridge is best known for its oil pipeline deal would give Elkem access to in the sector through the purchase of and gas transportation infrastructure. Both renewables growth in China while completed, operational assets and, in some the Comber Hill and the Cedar Point enabling Bluestar to strengthen its cases, the development of such assets. The windfarms have secured 20 year power competitiveness in the solar market and attraction is the steady long-term return on purchase agreements for the sale of their gain technological know-how. Elkem investment provided by renewable electricity to state power authorities, technology enables highly energy-efficient incentive mechanisms. Two of the North giving assurance and predictability on and environment-friendly production of American deals in the 2010 top ten list investment returns. solar-grade silicon. The Bluestar move reflected this trend – Brookfield reflects an intensification of efforts by Renewable Power Fund’s US$565m The other main deals of 2010 and moving chemicals companies such as Bluestar and acquisition of Canada’s 166 MW Comber into 2011 are listed in figures 5, 7 and 8. Dupont to gain solar market share and step Wind project and Enbridge’s US$500m We look at these in more detail in the up technological innovation. In a smaller purchase of the Cedar Point Wind Energy relevant regional sections later in this 2010 deal, for example, US specialty Project in Colorado, US, from its report. chemical maker Solutia bought privately developer, Renewable Energy Systems held Etimex Solar for US$326m. Americas.Figure 8: Top five renewable deals announced in 2010 and pending at 31 December 2010 No. Value of Date Target name Target Acquirer name Acquirer Market sector Type of transaction announced nation nation purchase (US$m) 1 2,100 26 Oct 10 Elkem AS Norway China National Bluestar (Group) Co. Ltd China Solar Technology 2 1,760 11 Dec 10 ETH Bioenergia SA Brazil Petroleo Brasiliero SA Brazil Biofuels Operational 3 933 19 Oct 10 Rete Rinnovabile Srl Italy Terra Firma Capital Partners Ltd UK Solar Technology 4 264 13 Dec 10 Swedish District Heating Business Sweden Macquarie Group Ltd Australia Biomass Operational 5 175 15 Jun 10 Jan Reichert (353 MW development pipeline) Poland AES Corp. USA Wind Operational Deal dialogue: Japanese international renewables expansion* Mitigating the risk involved in international investments, especially when entering newly developing markets, is one of the key challenges facing Japanese companies. The Sogo Shosha integrated trading companies Most Japanese outbound renewables investment • Sojitz Corporation has entered the US have already established a significant footprint has focused mainly on developed countries solar PV market with an investment in across the world. But utility companies, who including: Solar Power Partners (SPP), the largest have long been purely domestic players, are privately-held independent solar PV less accustomed to the risks involved in • Mitsui has agreed with Spanish construction developer in the US. SPP owns, manages, investment into developing countries. These major, FCC, to participate in a 50 MW and operates over 50 solar energy systems include the challenge of finding appropriate concentrating solar power (CSP) project in totaling c. 23 MW. local partners, preparing for volatile feed in Palma del Rio (Cordoba), Spain, through its tariffs in some territories, and securing subsidiary Mitsui Renewable Energy Europe. • Eurus Energy Holdings Corporation, a equity/debt financing. joint venture between Tokyo Electric • Mitsubishi Corporation has invested in the Power and Toyota Tsusho, will commence Some players have started to invest in Changwat Lop Buri power generation project the construction of a world-class mega established developers with a secured pipeline in Thailand. In terms of scale, the 73 MW solar power plant with a total installed of projects rather than directly into assets. This solar photovoltaic (PV) project ranks among capacity of 45 MW in California. Its M&A approach has many advantages (local the world’s largest PV projects currently commissioning is scheduled for June staff, secured contracts, capacity to gradually scheduled for production. 2011. All of the PV panels for the project invest) but requires robust multi-disciplinary will be supplied by Sharp Corporation. due diligence and sensitivity analysis to • ITOCHU Corporation and GE entered into a properly value the company and assess the collaboration and cooperation agreement to • Sharp Corporation’s US$305m purchase pipeline by layers of risk and financial identify co-investment opportunities in of Recurrent Energy in the US (see ‘Deal attractiveness. renewable energy worldwide. Totals’ section). *Commentary written prior to March 2011 Japan earthquake11 Renewables Deals 2010 analysis and 2011 foresight
  13. 13. Deal dialogue:Valuation – the green premiumThe term ‘green premium’ was coined to describe the price, relative to peers,investors were willing to pay for businesses with products exposed to therenewable energy sector.The premium reflected the perceived structural As the value gap begins to narrow, thanks to • The global wind supply chain, still recoveringgrowth that existed in markets pursuing a low greater stability in the macro-economy and a from recession-driven sluggish demand, iscarbon agenda. But it has diminished as lowering of price expectations on the part of showing signs of a recovery with a number ofgovernment expenditure and support for sellers, we are likely to see an increase in bidder transactions trading for higher than usualrenewables has become less certain in the wake competition for targets. As deal sizes increase multiples. Acquisition of technology andof the financial crisis. and the availability of finance improves, integration-plays, resulting in synergies, will financial investors will re-emerge, increasing drive competition for good businesses andNonetheless, a legacy still remains in the form of prices and valuations, and pricing will swing improve valuation metrics.a value gap between buyers and sellers. Sellers back in favour of sellers, at least for a period ofstill seek significant premiums while buyers, time. • Overcapacity in the solar supply chain isreluctant to pay for uncertain growth profiles, driving M&A activity in an attempt toare no longer prepared to pay significant The indecisive policy approach by governments consolidate and drive down costs. Premiumsmultiples for these businesses. to the sector creates uncertainty, and, in the are being paid for companies that provide a minds of many investors, risk. This uncertainty distribution platform for current productThe recent listing of Enel’s renewables-focused translates directly into downward pressure on ranges or exposure to cutting-edgebusiness Enel Green Power (EGP) is a case in valuation metrics and, ultimately, to less technology.point. Originally marketed at a 10.4 EV/Ebitda appetite by investors to deploy capital intomultiple, EGP made it to market at 8.4 renewables. Within the wind and solar sectors, The recent return to US$100+ priced oil, andEV/Ebitda, a significant fall from the lofty there are specific and dynamic trends also the reaction to the nuclear emergency in Japan,heights of its direct play wind flotation influencing value, in particular: should provide some further support topredecessors. Iberdrola, EDP and EDF all listed valuations.their renewables arms between 16.9 and 40.4 • Wind assets are seeing a resurgence ofEV/Ebitda*. Although unique businesses, with interest from investors as they seek a haventheir own risk idiosyncrasies, the difference in from the turmoil surrounding uncertainty ininvestor perceptions is noteworthy. some governments’ policies in solar. This should translate into support for the pricing of generating assets and development pipelines. *Source: Company accounts; Capital IQDeal dialogue:How EAM techniques can enhance deal valueEmbedding effective asset management (EAM) practices across the asset lifecyclehelps in the successful completion of renewable energy M&A transactions. Itreduces the initial investment and ongoing cost of ownership. It increases assetavailability. It also supports a higher sale price in an exit transaction.Consequently, best-in-class developers are deploying EAM solutions as early asthe design phase of renewable projects.Lifecycle costs can vary considerably, depending To increase value, the asset owner needs to be Value is also enhanced when the asset owneron the renewable technology deployed. For fully involved during development, including defines not only the required machineexample, solar PV panels, once installed, require the pre-construction phase, choosing a design performance but also the expected reliability foralmost no routine maintenance. The required and selecting materials that will decrease the projects lifespan. Low failure rates meanattention increases as the asset becomes less lifecycle costs. For example, a wind turbine that production goals can be met with lesspassive, as is the case with hydro, wind, design that incorporates non-corrosive installed capacity than otherwise might begeothermal, and biomass. Geography has an materials, has easy machine access for deployed. As a result, the upfront capital costimpact too – fleet maintenance is more personnel and a fleet-specific maintenance could be lower and the gain extracted from ademanding in a cold and wet location, such as programme can reduce ongoing maintenance deal may be correspondingly higher.the North Sea, compared to a dry and arid area, costs.such as western Texas. By emphasising EAM early during the Modern maintenance programmes help to development stage, the owner of the asset can mitigate the consequences of failure by using realise optimal performance over the expected condition-based maintenance techniques such operating life of the investment. This will reduce as online performance and vibration analysis, the overall cost of ownership and increase wall thickness monitoring and thermal imaging. capacity, which means a higher sale price when These maintenance programmes must continue exiting the investment. to be specified as third party maintenance providers change over the asset lifecycle. Renewables Deals 2010 analysis and 2011 foresight 12
  14. 14. Deal places: a focus on markets worldwide Deal numbers in all the major regions rose year-on-year (figure The number of Asia Pacific targets nearly 9). There were increases in both target and bidder numbers in doubled, from 33 in 2009 to 64 in 2010. The region accounted for 12% of all deals North America, Europe and Asia Pacific. These included rises of in 2010. But total deal value in the region 71% for targets in North America and 50% in Europe. Bidders fell from US$7.3bn to US$3.6bn. However, from both these regions were out in force, particularly in North these totals do not include the substantial America where bidder numbers more than doubled, from 103 in flow of Chinese renewables IPOs that took 2009 to 209 in 2010. The number of bids from European buyers place in 2010 (see figure 5). rose 41%, from 171 to 241. Elsewhere, South America’s share of worldwide deal value rose to 10% in 2010. Europe continued to deliver the largest The US$1.6bn Shell/Cosan deal accounted number of targets, accounting for nearly for nearly all of the region’s year-on-year half (48%) of all targets worldwide (figure increase, although it is notable that South 9). But target deal value was evenly split American buyer activity also rose, albeit between Europe and North America. Both from a small base, with 13 deals delivered US$13bn worth of deals (a 39% contributing US$1.4bn of total value. share each). While North American target value increased US$3.9bn (43%) year-on- year, European deal value went in the opposite direction with a US$18bn (58%) fall. Figure 9: Deals by target continent Europe 2009 2010 % change Value of deals (US$m) 30,964 13,045 (58%) Number of deals 171 256 50% Average deal value (US$m) 181 51 North America 2009 2010 % change Value of deals (US$m) 9,082 12,951 43% Number of deals 106 181 71% Average deal value (US$m ) 86 7213 Renewables Deals 2010 analysis and 2011 foresight
  15. 15. South America 2009 2010 % change Value of deals (US$m) 1,423 3,390 138% Number of deals 9 19 111% Average deal value (US$m) 158 178 Asia Pacific (incl. Australasia) 2009 2010 % change Value of deals (US$m) 7,329 3,563 (51%) Number of deals 33 64 94% Average deal value (US$m) 222 56Figure 10: 2010 deal percentages by continent by value of transactions (2010 total: US$33,416m)(2009 percentages shown in parenthesis – 2009 total: US$48,799m)By target By bidder Europe 39% (63%) Europe 41% (62%) North America 39% (19%) North America 43% (19%) Asia Pacific 11% (15%) Asia Pacific 11% (17%) South America 10% (3%) South America 4% (1%) Middle East & Africa 1% (0%) Middle East & Africa 0% (1%)Figure 11: 2010 deal percentages by continent by number of transactions (2010 total: 530)(2009 percentages shown in parenthesis – 2009 total: 319)By target By bidder Europe 48% (54%) Europe 45% (54%) North America 34% (33%) North America 39% (32%) Asia Pacific 12% (10%) Asia Pacific 12% (13%) South America 4% (3%) South America 2% (1%) Middle East & Africa 2% (0%) Middle East & Africa < 1% (< 1%) Renewables Deals 2010 analysis and 2011 foresight 14
  16. 16. Deal places: a focus on markets worldwide Europe The changes made by Spanish regulators Nowhere is the trend toward more deals but lower values more in December 2010 in relation to the overall evident than in Europe. Deals for renewables targets in Europe remuneration of certain completed rose 50% year-on-year but total value fell by US$18bn, down projects sent shock-waves through the 58% on the previous year’s total. Average deal value dropped investor community and claims are likely from US$181m to US$51m. to be heard in European courts in relation to PV installations. Although the government has underlined its continuing support for reasonable returns to investors, Subsidy uncertainty has been in the a lack of attention to the impact of changes background of the renewables deal of control since initial licensing and the environment in some parts of Europe. functioning of project financing packages Governments find themselves having to has caused concern to secondary investors. balance constrained public finances with green energy and energy security Germany and the UK took over from the priorities. Add to this the falling costs Iberian Peninsula as the focus for associated with solar installations and they renewables deal-making in 2010. Together, find good reason to introduce reviews of deals for UK or German assets accounted their tariff structures. Germany Spain and for well over a third (38%) of European Italy have announced plans to cut solar renewables deal value. The focus on the subsidies. In the UK, the government has UK and Germany reflects the major announced an early review of a feed-in expansion of offshore wind power in the tariff regime that was only introduced in North Sea as well as deals in non-offshore April 2010, which coincides with a review assets. Most of this activity, however, was of the support levels for large scale concentrated on smaller deals. renewable projects. Figure 12: Europe renewables deals by sector – 2010 By value % share of total Number of deals % share of total (US$m) Europe deal value Europe deal number Solar 5,387 41% 89 35% Wind 4,418 34% 97 38% Hydro 1,150 9% 8 3% Energy Efficiency 1,134 9% 34 13% Biomass 501 4% 18 7% Biofuels 300 2% 7 3% Geothermal 155 1% 3 1% Total 13,045 100% 256 100%15 Renewables Deals 2010 analysis and 2011 foresight
  17. 17. Elsewhere, deals for more established Alongside Spain, Italy was a deal hotspot In a deal that remained pending at the hydro assets continued to contribute to in 2010. Italian deal value was boosted by close of the year, US independent power deal flow and, indeed, the largest the Enel Green Energy flotation (see ‘Deal producer AES announced a major European deal completed in 2010 was a Makers’) but, also, by a significant level of expansion of its renewables footprint in US$742m hydropower sale by metals solar deal activity, spurred by government Europe with an intended US$175m 51% company Elkem in Norway (see ‘Deal subsidies for the sector (see commentary stake in the 353 MW development pipeline Makers’). The second biggest European in ‘deal totals’). Together, Spain and Italy of Polish wind developer Jan Reichert. It deal saw Iberdrola Renovables acquire the accounted for a fifth of European follows AES’ earlier majority stake in El Andévalo (Huelva) wind farm from renewables deal value. The third largest another Polish developer 3E’s 422 MW Gamesa for US$440m. The deal falls under completed European deal came in Spain project portfolio and adds to AES Wind’s the scope of an agreement for the sale of with the US$414m purchase of Africana existing European footprint in the UK. The wind farms in Andalusia agreed between Energia, a 49.9 MW solar power plant company also has minority stakes in wind Iberdrola Renovables and Gamesa Energía project, by construction and engineering developers in France and Bulgaria. in 2005. group Ortiz. The El Andévalo purchase in early 2010 Renewables deals in Germany and the UK has since been followed by Iberdrola’s were smaller. One exception, and the further expansion of the installed capacity remaining European deal in our top ten of the wind complex with the purchase of table (figure 7), was the US$389m sale by the 48 MW Los Lirios wind farm from EON of its remaining share of HEAG Gamesa. The Los Lirios acquisition takes Südhessische Energie to HEAG Holding. the overall capacity of the complex to 292 HEAG has significant activities in the MW, making it the second largest wind site renewable energy sector primarily due to in Europe behind the 322 MW Whitelee its activities as a generator of wind power. farm in Scotland, also owned by Iberdrola Renovables. Figure 13: Europe renewables deals by country - 2010 By value % share of total (US$m) Europe deal value Germany 3,582 27% UK 1,469 11% Spain 1,410 11% Italy 1,230 9% Norway 1,139 9% France 989 8% Denmark 472 4% Switzerland 335 3% Sweden 328 2% Malta 305 2% Other 1,787 14%2010 review… Total 13,045 100%...Regulatory reviews have clouded the deal environmentin some countries with a particular impasse in Spainbetween investors and the government… 2011 view… …But, the Spanish changes were not as radical as initially feared and were essentially limited to solar PV installations. Alterations to the regime for concentrating solar power (CSP) and wind were reached by agreement with industry bodies in an overall environment that reflects Spain’s continuing support of the renewable industry. In consequence, a significant volume of operational assets were brought to market following the December 2010 announcement. Renewables Deals 2010 analysis and 2011 foresight 16
  18. 18. Deal places: a focus on markets worldwide North America North America provided the main focus for renewables deal- Companies have also been able to take a making in 2010, with a year-on-year US$3.9bn rise in target grant in lieu of investment tax credits which has simplified things for developers value (up 43%) and an even bigger US$5.2bn increase in bidder by diminishing the need to attract tax value (up 57%). It now rivals Europe in terms of the total value equity into projects. However, to earn a of deals. grant, the facility had to be placed in service, or construction begun, by the end In the United States, the environment for of 2010 and must be completed within a renewable deal activity has become more specified period. In December 2010, these favourable. Alongside a recovery in incentives were extended for another year. financial markets, a key factor has been the This spurred a rush of projects which will ‘stimulus bill’, The American Recovery and have had an impact on deal activity as Reinvestment Act of 2009. An element of developers seek to sell projects at certain multi-year certainty was brought into milestones, such as at financial close or the tax-based incentives, which previously had in-service date. been subject to doubt due to their yearly expirations. The act also includes a US$6bn loan guarantee programme for renewable energy and electric transmission technologies, US$4.5bn for grid modernisation and smart grid implementation, and a number of measures to tighten energy efficiency requirements. Figure 14: North America renewables deals by sector – 2010 By value % share of total Number of deals % share of total (US$m) North America deal value North America deal number Wind 3,984 31% 35 19% Energy Efficiency 2,482 19% 52 29% Solar 2,401 18% 35 19% Hydro 1,803 14% 10 6% Biomass 1,172 9% 24 13% Biofuels 861 7% 18 10% Geothermal 248 2% 7 4% Total 12,951 100% 181 100%17 Renewables Deals 2010 analysis and 2011 foresight
  19. 19. Energy efficiency deals are a major growth The largest Canadian deal completed in Another effect of low gas prices has beenspot in North America deal-making. They 2010 was metals company Teck Resource’s added pressure for consolidation in theaccounted for the largest share of deals in US$729m sale of a one third interest in the turbine manufacturing sector. In a key dealour 2010 analysis – 52 out of 181 deals – Waneta Dam hydro facility to BC Hydro. close to the year end, United Technologiesand their US$2.5bn total value accounts The deal had been announced the previous Corporation completed the purchase offor nearly a fifth (19%) of total deal value. year as the miner sought to strengthen its California-based Clipper Windpower, inTheir value just outstrips solar and is balance sheet following mining purchases which it already had a 49.9% stake. Thesecond only to the US$4bn wind sector made at the height of the commodities turbine market is increasingly dominatedtotal. North America has by far the biggest boom. In the US, another large deal not by multinational diversified companiesshare of worldwide energy efficiency deals discussed elsewhere in this report was such as GE, Siemens and UTC, posing– accounting for two thirds of worldwide power generation company NRG Energy’s tough competition for independents likevalue (see earlier ‘Energy Efficiency’ US$350m acquisition of Green Mountain Clipper. In contrast, UTC not only hassection for more commentary). Energy, a retail provider of clean energy greater market reach and balance sheet products and services. Like the Exelon strength but is able to leverage expertise inThe largest North American deal, Exelon’s deal, it highlights moves by generators to blade technology, turbines and gearboxUS$900m purchase of John Deere expand their renewable energy portfolios. design gained from activities such as itsRenewables (see ‘Deal Makers’) was involvement in Pratt & Whitney aircraftsymbolic of the extent to which the The low price of gas in the US has cast a engines and Sikorsky helicopters.renewables sector has come of age and is shadow on the renewables sector, keepingnow an essential part of mainstream power values down and hindering development.portfolios. Other key North American deals One impact has been as a drag anchor onincluded large windfarm purchases by deal-making in some larger-scale‘infrastructure-type’ investors, including generation assets. For example, AustralianBrookfield Renewable Power Fund in wind power producer, and former BabcockCanada and pipeline operator Enbridge in & Brown-owned, Infigen Energy has beenthe US (see ‘Deal Makers’). There were seeking to sell some of its US assets inalso significant inbound purchases of US order to reallocate capital to its homesolar technology companies by Sharp and market. But agreement could not beAreva (see ‘Deal Totals’). reached on valuation and the sale was withdrawn. Figure 15: North America renewables deals by country – 2010 By value % share of total (US$m) North America deal value United States 10,360 80% Canada 2,591 20% Total 12,951 100% 2010 review… ...The gas glut that has arisen from shale gas extraction in the US has dampened the renewables sector in the US… 2011 view… …But even against a background of low gas prices, deal activity has been lively and the outlook looks set for continued deal growth. There is particularly strong growth in the energy efficiency sector which will continue to be spurred by new energy savings targets and codes. North America already has the largest share of energy efficiency M&A, accounting for US$2.5bn or 65% of the US$3.8bn worldwide total. Additionally, continued investment in renewable generation projects is necessary to meet level renewable portfolio standards now present in more than 30 states. Renewables Deals 2010 analysis and 2011 foresight 18
  20. 20. Deal places: a focus on markets worldwide Asia Pacific Asia Pacific was again a relatively small contributor to Chinese wind turbine manufacturers were also active in the IPO market. In October worldwide renewables deal value in 2010, accounting for 12% of 2010, the largest Chinese renewables IPO all deals in 2010. Like Europe, the strong theme in the region was saw the US$1.1bn flotation of Chinas a bigger volume of deals but for smaller values. Deal numbers second-largest wind turbine maker, nearly doubled but deal value halved (figure 9). However, these Xinjiang Goldwind Science & Technology. This was priced at the top of expectations totals related to mainstream M&A activity and do not include but only after earlier plans had to be the substantial flow of IPO activity involving Chinese renewables shelved in the light of market conditions. companies. Then, early in 2011, its larger rival, Sinovel, came to the China stock market with a US$1.4bn IPO. Chinese wind There were a number of Chinese IPOs on The Huaneng Renewables flotation was turbine companies Sinovel and Xinjiang the Hong Kong stock exchange in 2010 and not helped by its timing so close on the Goldwind provide formidable competition the trend is set to continue into 2011. Two heels of China Datang’s US$643m flotation for western manufacturers such as Vestas, of the major Chinese ‘gencos’ - Huaneng of its renewable power unit. However, like GE and Siemens. The IPO proceeds will Group and China Datang – planned IPOs of Enel Green Power in Europe, the Datang enable them to expand their pipelines as their renewable arms during the year. offer was priced at the lower end of its well as strengthen R&D as they compete in However, while investor interest has been target range. Earlier in the year, the global markets for the next generation of substantial, the flow has been dogged by investment arm of the Hebei provincial large 6 MW turbines. market volatility. Huaneng Group decided government divested natural gas to cancel its flotation of Huaneng distributor and windfarm operator China China plans to source 15% of its energy Renewables at the last minute in December Suntien Green Energy in a US$426m IPO. requirements from renewable sources by 2010. It intends to revive it in 2011. On the solar front, Trony Solar Holdings 2020 and the country’s Alternative Energy held a US$257m IPO in September 2010. Plan is encouraging investment in wind, solar and nuclear power. China is the world’s biggest exporter of solar cells and western companies have been busy forming manufacturing alliances and, in some cases, conducting M&A. In 2010, this included the purchase of China National Solar by US company National Clean Fuels. Figure 16: Asia Pacific renewables deals by sector – 2010 By value % share of total Number of deals % share of total (US$m) Asia Pacific deal value Asia Pacific deal number Solar 1,302 36% 20 31% Wind 1,061 30% 21 33% Biomass 514 14% 3 5% Hydro 361 10% 12 18% Energy Efficiency 136 4% 3 5% Geothermal 128 4% 3 5% Biofuels 61 2% 2 3% Total 3,563 100% 64 100%19 Renewables Deals 2010 analysis and 2011 foresight

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