The renewable energy sector in North America is experiencing intense merger and acquisition (M&A) activity. As visionaries strove to identify appropriate targets and valuation metrics, the number of deals grew by two-thirds year-on-year in 2011, although the total deal value decreased by one-third, from $48.8 billion in 2010 to $33.4 billion in 2011.
New analysis from Frost & Sullivan's (financialservices.frost.com) Mergers & Acquisitions in Renewable Energy in North America research reveals that this market is estimated to double in 2013 due to increased interest in alternative energy sources.
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"In 2011, the number of deals rose dramatically - by 58 percent from 2010 in wind and 48 percent from 2010 in solar - but total values were down by 24 percent in wind and 20 percent in solar," said Frost & Sullivan Business & Financial Services Consultant K. Vinod Cartic. "Investors, developers and operators were extremely busy, but the typical deal size was smaller."
For project developers, financing is limited, and entrants must primarily rely on their own capital. For technology developers, entry is possible through partnerships with existing research labs.
The renewable energy market is highly competitive and is moving to a cost-based business model. Its higher capital costs, compared to conventional energy systems', reduce its growth potential. Additionally, the technical skills needed to operate these systems affect the system installation, as well as the overall costs.
"Companies must resort to effective asset management to enhance the value chain," noted Cartic. "Governments can do their bit to safeguard the industry's interests through transparent and stable tariffs and using technology as a differentiator."
Mergers & Acquisitions in Renewable Energy in North America is part of the Business & Financial Services subscription. Frost & Sullivan's related research services include: Renewable Energy for Residential and Commercial Applications, Global Inverter Market for Renewable Energy Systems, Mergers and Acquisitions in Renewable Energy in Europe, and Supply Chain Analysis for Renewable Energy Markets. All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.
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