Renewable technology deals soar, claims PwC analysis

A study by PwC has noted a 40% increase in renewable technology deals in 2011, but Alex Blackburne explains how this year’s fortunes are heavily dependent on how the Eurozone plays out. This means 2012 might not be quite as encouraging.

In 2011, a record $53.5 billion (£33.9 billion) was spent on renewable technology deals worldwide – a 40% jump from the £38.2 billion (£24.2 billion) recorded the year before, according to professional services firm, PricewaterhouseCoopers (PwC).

In a report titled, Renewables Deals: 2012 outlook and 2011 review, PwC say the $15.3 billion (£9.7 billion) increase was largely down to advances in the solar and energy efficiency sectors, which combined, accounted for 79% of the upsurge.

Paul Nillesen, partner at PwC renewables, commented on the encouraging figures.

He said, “Sustained high deal numbers and record total value reflect a maturing of the sector.

“The trend is all the more noteworthy given the uncertainty in the market and in government policies on renewables”.

This promising trend isn’t necessarily going to continue into 2012, though.

The report points to a “rolling uncertainty scenario” with regards to the eurozone, stating that the number of deals is likely to diminish if there were to be a major crisis.

“Worries about a further recession, constraints on financing and fears of a worst case collapse will inevitably cause dealmakers to continually reassess their options over the coming months”, it reads.

However, Nillesen said the market uncertainty might not necessarily rule out big deals.

“Staying out of the markets in the hope things will improve cannot be assumed to be the right strategy”, he said.

“The potential for further destabilisation domestically, or at an inter-governmental level cannot be ruled out, but if a deal is highly strategic, and mission critical, then parties will still feel it is worth doing on the right terms”.

The following chart underlines what percentage of the total deal value each renewable sector contributed to in 2010 and 2011.

Click to enlarge.Wind power was knocked off its 2010 top spot by a budding solar industry that storms to the top despite recent uncertainty surrounding the feed-in tariff scheme.

The PwC report goes on to highlight the increased involvement of pension funds in the renewables industry.

It picks out Denmark – already world leaders in wind power – as the frontrunners at encouraging offshore wind power pension funds. This, it says, is likely to become a growing trend elsewhere in the world, including the UK.

Adam Bell, communications manager at RenewableUK, the trade and professional body for the UK wind and marine renewables industries, welcomed PwC’s findings.

“Its findings show that despite both policy and broader economic uncertainty, the [renewables] market continues to both strengthen and mature”, he said.

“The entry of institutional investors such as pension funds into the market is a further indication of the secure returns that renewables can offer, not just for investors, but for the wider economy too”.

Head of external affairs at the not-for-profit Renewable Energy Association (REA), Leonie Greene, was similarly positive about the PwC report.

“It’s good to see renewable energy breaking another record”, she said.

“Many countries now recognise that renewables are a driver of, and not a drain on, economic growth”.

Greene added that the REA was “cautiously optimistic” about renewable technology progress in the UK, but says we all need to ensure that we’re singing from the same hymn sheet.

“We want to see UK firms thriving in the global market which is clearly increasingly competitive”, she identified.  

“The UK needs to strengthen its position in the global market in many technology areas.

“It is vital that the coalition Government pulls in one direction on renewables and provides investor confidence across the three key sectors: heat, power and transport.

“We’d like to see a clear UK industrial strategy on renewables to ensure the UK maximises its manufacturing, employment and export opportunities”.

The PwC analysis clearly proves that the renewable technology industry is thriving, and if things play out well in the eurozone, on the up as well.

You can help to continue this trend by investing in these kinds of technology. Don’t think your money won’t make a difference, because it definitely will.

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