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Offshore wind M&A activity surges 51% year-on-year

image credit: Enerdatics
Mohit Kaul's picture
Founder, Enerdatics

Building Enerdatics. Leadership experience in a high growth SaaS company and secured a successful exit. A natural leader who cares about creating value for all stakeholders. Extensive experience...

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  • Nov 30, 2022
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In light of the recent uptick in deals and strategic partnerships for offshore wind assets across the world, the Enerdatics research team has analyzed the driving forces and characteristics of this phenomenon and summarised its key findings in the above slide.

 The highlights of the analysis are:

– M&A activity for offshore wind assets surged by 51% year-on-year (Y/Y) in 2022, and by a staggering 480% since 2019

– The surge is driven by significant declines in installation costs, technological breakthroughs, ambitious government targets coupled with supportive regulatory policies, and the entry of different categories of players

– Evolving partnership matrices leverage complementary strengths of the companies involved, with oil and gas majors bringing extensive offshore experience and power companies contributing to electricity marketing and supply-chain synergies

– Geographically, the UK and Germany continue to dominate large-scale activity, as ambitious government targets and supportive policies - such as Germany’s Easter Package - prove to be consistent drivers of deal activity. In Asia - South Korea, Japan, and Taiwan continue to lead the pack of attractive regions, primarily due to their extensive coastlines with deep waters, while Australia also witnessed a significant surge in initiatives to develop gigawatt-scale projects

– Countries that saw their first offshore wind JVs include Lithuania, New Zealand, Philippines, Colombia, and Ireland, as regions with severe dependence on conventional energy sources transition to cleaner power mixes to satisfy the forecasted rise in power demand

– Transactions for commercial-scale floating wind installations have risen by more than 40% Y/Y so far this year, accounting for nearly 40% of the total M&A activity in the offshore wind space in 2022. European oil majors, established utilities, Private equity (PE) firms, and technology specialists are all racing to establish their footprint in this segment

– PE firms and privately funded companies recorded more than a 100% Y/Y rise in M&A activity, so far in 2022. Meanwhile, O&G companies continued to expand their geographic footprint through strategic partnerships

– O&G majors are able to leverage their experience operating offshore oil and gas installations globally, and have formed partnerships with local developers and technology specialists to build out their portfolio; major players include Equinor, Shell, TotalEnergies, Eni and bp

– Meanwhile, PE firms are increasingly gravitating towards acquiring direct stakes in operational and under-development assets, seeking to make the most of the dramatic cost declines and need for low-cost capital in the sector; most active PE firms include Copenhagen Infrastructure Partners (CIP), Global Infrastructure Partners (GIP), Macquarie’s Green Investment Group (GIG), HitecVision, Mubadala Capital and Ontario Teachers Pension Plan

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation. 

Discussions
Matt Chester's picture
Matt Chester on Nov 30, 2022

Intersting-- it does seem like the scale and expertise required for successful offshore wind installation and operation will favor the majors being the ones to be involved rather than upstarts like is possible in smaller onshore wind, solar, or other more modular projects. 

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