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Power and utilities deal value reaches Q1 high

Power and utilities (P&U) deals globally reached an all-time quarter high of $97bn (EUR 83.4bn) in the first quarter (Q1) of 2018, according to EY.

49 per cent of all Q1 deals involved renewables, according to the consultancy.

EY’s power transactions and trends Q1 2018 report shows that roughly 48 per cent of the total deal value in the period came from a single European “megadeal” — E.ON’s acquisition of German renewables-focused utility Innogy.
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This deal, estimated at $46.6bn, also contributed over 76 per cent of total deal value in Europe as a whole, which reached a record $61.3bn. About 96 per cent of the total is attributed to renewables, transmission and distribution, and integrated assets, EY said.

“European power and utilities continue to gravitate toward renewable investment, with 30 clean energy deals announced during the first quarter of 2018 amounting to $6.3bn. With traditional utilities in Europe continuing to feel the pressure from renewable energy, as well as oversupply and declining demand, we could see more consolidation and a drive toward scale,” commented Miles Huq, EY Global Power & Utilities Transactions Leader.

In the Americas, sector deal value climbed 32 per cent quarter-on-quarter to $29.4 bn, including 22 clean energy deals worth a total of $3.1bn. Huq commented that momentum in renewables continues in the US.

“Despite initial concerns that federal tariff increases on imported solar cells would slow the US solar industry, a continued decline in technology prices and corporations’ resolve to embrace renewables has sustained momentum in this segment,” he said.

In Asia-Pacific, meanwhile, the deal volume dropped by 58 per cent from Q4 2017 to $5.8bn. Looking just at renewables-related deals, value plunged 90 per cent, according to the report.

According to the EY Power & Utilities Global Capital Confidence Barometer (CCB), some 71 per cent of P&U executives anticipate a rise in mergers and acquisitions (M&A) activity and 61 per cent see an improvement in the sector economy in the next 12 months.

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