In the CEE&SEE regions, wind energy accounted for 53% of all green energy production deals between 2007 and the third quarter of 2010, while small and micro hydroelectric plants and solar energy represented 27% and 12% of the transactions, respectively. Other renewable energy sources – such as biogas or geothermal – were lagging behind with a total share of 8%.
In terms of number of deals, Turkey is the leading country with 29 deals. However, in terms of deal value, Romania was the largest market with a total deal value of approximately EUR 650 million. The leading position in renewable energy production M&A of the two countries is due to their favorable natural and state support conditions for renewable energy and recent hydroelectric and geothermal power plant privatisations.
Turkey
Turkey led the M&A renewable energy market among CEE&SEE countries between 2007 and Q3 2010 as the government carried on with its privatisation plans in the renewable energy production sector. Not surprisingly, four of the top five RES transactions in terms of value in the examined period were privatisation deals. The biggest one was the acquisition of four HPPs in central Turkey by Kayseri ve Civari Elektrik for nearly EUR 56 million, followed by an EUR 37 million purchase of another four HPPs in the eastern part of the country by Nema-Espe consortium. The acquisition of wind power company Bares Uretim by Italy’s Italicementi Group for EUR 32 million was the third largest transaction in the sector. The government’s strong commitments to promote renewable energy and to privatise state owned power plants is likely to ensure further M&A activity in the sector.
Poland
Poland is still working on achieving its RES target and observed a fairly high M&A activity in the sector. Both in terms of deal number and in terms of total deal value, the Polish market was the second largest in the CEE&SEE regions. The largest deal in Poland in the examined period was the acquisition of three wind farm projects in northern Poland (EUR 130 million), followed by EBRD’s minority stake purchase in Iberdrola Renewables Polska (EUR 75 million). Wind farms were the targets of over 80% of all deals in the sector. The wind energy segment may also be regarded as the most promising in future renewable energy transactions, as the development of wind farms and higher biomass use are among the goals of the government’s energy policy.
Romania
In Romania, most of the M&A transactions recorded by DealWatch since 2007 involved the wind energy sector, which is also expected to bring the largest number of future deals, as the country has an annual wind potential estimated at 23 TWh, according to the Energy Strategy of Romania for 2007-2020. Transactions were also recorded in the hydroelectric power sector, driven by the privatisations made by state-owned electricity giant, Hidroelectrica. The largest deal in Romania in the examined period was the acquisition of wind farm projects by CEZ in Cogealac and Fantanele for EUR 301 million, followed by Iberdrola Renovable’s purchase of 50 wind farm projects for EUR 250 million and more recently, at the end of 2009, RWE’s EUR 30 million investment in the acquisition of a major wind park project with an installed capacity of approximately 230 MW. As for other promising fields for RES M&A, the Danube Delta and Dobrogea regions also hold potential for solar energy developments.
Czech Republic
In the Czech Republic, the solar energy field brought the highest number of M&A transactions since 2007 and the deal activity on this segment is expected to continue despite a controversial solar energy law. According to Energy Regulatory Office, the installed output of solar plants in the country has exceeded 1,000 MW and continues growing rapidly. Thus, in an attempt to stop its effect on electricity prices, the lawmakers passed a draft which restricts state support for this field and introduces a 26% tax on profits from operating solar power plants. Therefore, new construction of such units is likely to decrease. Another promising field for RES M&A is represented by the geothermal energy, with more such projects being under way in several towns. CEZ has been a very active acquirer, the company being responsible for approximately 36% of all transactions in the country. The largest deal recorded by DealWatch in the analyzed period was the acquisition by EnerCap Capital Partners of three solar power plants for EUR 15mn, followed by REN Power’s purchase of SVEP, the operator of two wind power plants in the Petrovice municipality in the Krusne Mountains.
Bulgaria
Bulgarian RES industry got a strong push from the country’s accession to the EU in 2007. In order to achieve the RES targets, the country introduced new legislation giving incentives to renewable and alternative energy production. In addition to the government’s incentives, favorable conditions for wind and solar power attracted huge investor interest. Some of the largest acquisitions in the sector were conducted by leading European players, such as Enel, Atel and Raiffeisen Energy. Bulgaria plans to adopt a new RES law and its renewable energy action plan which is likely to bolster future M&A activity in the sector.
Hungary
As Hungary achieved its RES target already in 2005, there is a relatively low M&A activity in renewable energy production, the country’s market is only the 6th largest in the CEE&SEE regions. The largest deal in Hungary in the examined period was EBRD’s minority stake purchase in Iberdrola’s wind energy farms (EUR 50 million), while the second one was the acquisition of local wind energy company AET by RWE for EUR 30 million. According to our list of transactions, wind energy companies seem to be the most attractive targets in Hungary, and this trend is likely to continue, as the country’s largest electricity company, MVM declared its interest in further wind energy acquisitions and Raiffeisen Energy also plans further investments in the sector.
