* Global deals climbed 40 pct to $53.5 billion in 2011
* More consolidation as renewables markets mature
* EU economy uncertainty could dampen deal flow in 2012
By Nina Chestney
LONDON, Jan 30 Global renewable energy
deals climbed 40 percent to a record high of $53.5 billion last
year from $38.2 billion in 2010, as solar, wind and energy
efficiency overtook hydropower as the main deal drivers for the
first time, a report said on Monday.
Historically, hydro power has dominated renewables deal
flow, but deals worth $1 billion or more in wind, solar, biomass
and energy efficiency have outnumbered hydro by seven to one,
the PriceWaterHouse Coopers report said.
The renewables market is maturing, fuelling more
consolidation, and a rethink of the role of nuclear in many
countries after the Japanese nuclear crisis last year provided
an extra boost to renewables generation in certain markets.
"Sustained high deal numbers and record total value reflect
a maturing of the sector," said Paul Nillesen, PwC renewables
"The trend is all the more noteworthy given the uncertainty
in the market and in government policies on renewables. We
believe that deal flow will continue to be significant in the
Global clean energy investment hit a record $260 billion in
2011, which was mainly driven by a solar boom, a Bloomberg New
Energy Finance report showed.
But renewable energy, excluding hydropower, will account
for just 5 percent of the world's total energy production by
2030, according to BP estimates.
WHAT LIES AHEAD?
Solar and energy efficiency deals accounted for 79 percent
of the $15.3 billion rise in the total value of renewables
deals. One in three deals last year was solar and the overall
deal value for the solar sector was up 56 percent to $15.8
billion from $10.2 billion in 2010.
Falling solar prices are making solar power more economic
and closer to grid parity in some markets.
The entry of pension and insurance funds, most notably a
$1.1 billion investment by Danish pension insurance groups in a
50 percent stake in Dong Energy's Anholt offshore
wind project, shows the renewables market is maturing and
secondary markets have been created, with assets sold for a
second or third time.
But the renewables sector could face a tough 2012.
U.S. and European manufacturers will be under increasing
cost pressures and some Chinese manufacturers will also face
heavy debt and feel competitive strain, PwC said.
Significant overcapacity in China could result in a
succession of tie-ups within and between the main manufacturing
territories of the United States, Germany and China, leading to
a smaller number of big global players.
As well as a smaller number of global players in the solar
market, PwC expects consolidation among larger players in the
wind power sector. Recent profit warnings from Danish company
Vestas are the most high profile example of the
challenges facing some wind power companies.
Continued uncertainty about the eurozone economy will make
the deal environment much more difficult for 2012. A deeper
crisis would dampen deal flow further, but Nillesen said market
uncertainty might not block the biggest deals.
"The potential for further destabilisation domestically, or
at an inter-governmental level cannot be ruled out, but if a
deal is highly strategic, and mission critical, then parties
will still feel it is worth doing on the right terms," he said.
(Editing by Keiron Henderson and Alison Birrane)