* Global deals fall to $10.4 bln vs $21.7 bln in Q1
* Limited support from Europe and U.S.
* China still dominates global renewables market
By Nina Chestney
LONDON, Aug 29 The total value of mergers and
acquisitions in the global renewable energy sector dropped by
more than half in the second quarter, Ernst & Young said on
The main driver behind the fall was the United States and
Europe's limited support for renewables over cheaper coal and
gas, the accountancy firm said in a report.
The 55 deals in the second quarter had a combined value of
$10.4 billion, against $21.7 billion from 56 deals in the
previous quarter, as the market continued to consolidate amid
fierce competition, low prices and tight demand.
A shift in focus to clean technology and energy efficiency,
rather than traditional renewables such as wind and solar,
helped to keep the number of deals stable.
Renewable energy in general has slipped down governments'
agendas and prompted subsidy cuts in several countries, which
have forced utilities and developers to look for investment
opportunities in new markets such as Asia, Latin America and
Difficult market conditions are hurting the smaller players,
with the solar sector in particular having suffered some
casualties, the report said.
In the second quarter, U.S. solar equipment manufacturer
Abound Solar filed for bankruptcy, while Germany's Centrotherm
Photovoltaics filed for insolvency protection. General
Electric halted plans to expand its manufacturing
capacity in Colorado and Germany's Schott Solar closed
its New Mexico plant.
"Major utilities and energy groups continued to rationalise
their renewable energy portfolios through structured divestment
programmes to dispose of non-strategic businesses and assets, as
they sought to deleverage their balance sheets," said Ben
Warren, energy and environmental financial leader at Ernst &
A separate report in January found that global renewable
energy deals climbed 40 percent to a record high of $53.5
billion last year, from $38.2 billion in 2010.
On a positive note, the slowdown may only be temporary.
Transaction activity in China is expected to increase in the
second half as solar and wind technology companies try to access
new markets through the acquisition of development portfolios,
Ernst & Young said.
China was the main contributor to a 24 percent rise in new
global investment in clean energy during the second quarter - to
nearly $60 million - as large Chinese solar and wind projects
raised millions of dollars of finance, research firm Bloomberg
New Energy Finance estimated in June.
China remained the most attractive country for investment in
renewable energy on an Ernst & Young index that ranks 40
countries according to their technologies and policies.
"Going forward, it has a number of challenges to overcome,
such as the oversupply of wind turbines and solar panels, and
resolving grid transmission issues," the report said.
Germany and the United States shared second place but show
marked differences. The forthcoming U.S. elections have led to a
slowdown in the government's decision-making process, while
Germany is pushing ahead with an ambitious renewable energy plan
to replace nuclear power.
Britain moved up one place to fifth on the index, but only
because Italy fell to sixth place on worsening economic
The UK's renewables support and decarbonisation strategy
announcements in the second quarter all failed to create greater
certainty in the market, the report said.