Six investment trends that are reshaping the energy and utilities sector despite COVID

Defense Daily subscriber and registered users, log in here to access the content.

Pages

Categories

We are the first in your inbox with the highest news in the industry and we keep it smarter and one step ahead in this competitive and ever-changing market.

Investors in the global energy and utilities sector followed systems that created long-term pricing in the first part of this year when the COVID-19 pandemic shook the world. Recent activity relates to several attractive trends that are likely to persist in a post-crisis world and possibly even drive replacement in the sector, recommending further analysis through global consultanc firm Ernst and Young (EY).

According to EY’s Energy and Utilities Trends and Transactions report released on August 6, in the first part of 2020, the energy and utilities (UP) sector saw the price of global transactions rise to $58.8 billion, a 24% increase over it. it was in 2019, but much of it in Asia-Pacific Europe, Africa and the Middle East.

Total venture capital financing in generation at the time amounted to $2.8 billion, the maximum of which was invested in electric transport, garage and virtual platforms. And despite the “roller coasters” caused by the pandemic, the debt and justice markets ended the first part “on a positive note,” said Miles Huq, a spouse of EY Strategy and Transactions.

However, overall returns eroded in the U.S. global segment. And utilities sometimes performed lower than the respective regional benchmarks until the end of the first part. “A look at the broader regional market indices indicates that the era of the first half of 2020 ended with only -3.1% (US 500); -2.0% (STOXX Europe 600); and -4.9% (NIKKEI Asia-Pacific 225). However, EY-U’s analyses for the Americas, Europe and Asia-Pacific fell and dropped -12.5%, -2.0% and -11.0%, respectively, in the first part of 2020,” Huq said.

“The relative low performance of the U.S. sector is puzzling, given the industry’s defensive profile that provides higher dividend yields to investors and sees that top-yielding corporations are well capitalized and have benefited from access to capital markets the worst of the pandemic to date. “

However, Huq warned that the macroeconomic environment will gradually improve. “As interest rates are expected to remain low, there will be significant capital in the debt and equity markets to finance expansion investments,” he said.

Some trends that have emerged involve critical investment points.

1. Renewable energy has maintained investor confidence. Of the 257 international agreements reached in the first part of 2020, the highs were announced in the first quarter and more than 60% were for renewable energy, according to the report. “Accelerating [environment, social and governance (ESG)] among investors provides continued confidence in the long-term symbol of blank power,” he adds.

The report also suggests that overall investment focuses on long-term value. Quotes, for example, a recent letter from Larry Fink, president and chief executive of US global investment control giant BlackRock, suggesting that “climate is an investment,” EY said: “BlackRock has announced the withdrawal of companies from its actively controlled portfolio that generate more than 25% of its revenue comes from thermal coal and will largely look to other corporations that rely heavily on coal as thermal inputs.”

The acquisition of TerraForm Power by Brookfield Renewable Partners, which has a 4.2 GW renewable energy portfolio to create “one of the world’s largest renewable energy companies,” is one of the most notable renewable energy transactions in the first half. Brookfield’s portfolio already includes 19 GW of hydroelectric, wind, solar and garage services in North America, South America, Europe and Asia, and thirteen GW are under development. In Canada, Hydro-Québec acquired a 19.9% stake in Innergex for $490 million, resulting in a combined “strategic alliance” and renewable structure capabilities.

2. Integrated utility companies are selling in basic assets. Integrated utilities remained the segment with the largest investment through monetary players: the overall price of transactions in the segment increased by 45%, from $24 billion in the first quarter of 2020 to $34.8 billion in the current quarter. Notable transactions included abu Dhabi Power Corp’s $20.3 billion merger. and Abu Dhabi National Energy Co. (TAQA) to create one of the largest utility companies in the Middle East region.

Earlier this year, EnBW will also sell its 28.35% stake in EVN AG, an Austrian electricity manufacturer and store with operations in 16 countries at Vienna’s Wiener Stadtwerke GmbH, for $800 million, to allow EnBW to focus on renewable energy acquisitions. Centerpoint Energy sold its herbal fuel retail business to Energy Capital Partners for $400 million to focus on its core electric power and herbal fuel utility business. Marking a similar increase in deals in the third quarter, Dominion Energy recently announced that it would cancel its allocation of the Atlantic Coast pipeline with Duke Energy and sell most of its $9.7 billion fuel and garage transmission assets to Berkshire Hathaway Energy.

3. Activist investors are putting pressure on public facilities for sustainability. As reported in the EY report in April 2020, several Japanese banks, in addition to Mizuho, Sumitomo Mitsui and Mitsubishi UFJ (MUFG), announced new stricter coal financing policies. In March, Evergy, a Kansas-based utility company, agreed to re compare its business and an asset sale at the request of Elliott Management Corp., a U.S.-based activist hedge fund. With a significant interest in the utility company. “Elliott also invested $1.4 billion with other actors at CenterPoint Energy, which led the latter to form a committee to compare his strategic options,” the report reads.

“Other utility companies affected by the wave of activist investors include NRG, Sempra, FirstEnergy, AES and Hawaii Electric Industries. While these investors continue to aggressively implement their programs, utilities can align them with renewable energy, climate change, deleveraging, etc.

4. Investment in electric garage is about to increase. While the Americas accounted for about 14% of global transaction activity, “given the expected speed of replacement in the U.S. sector, once we reached the other aspect of the pandemic, there are many points that recommend that this may be a very active market,” says the report, which presents the EY Americas P-Uies Utilities analysis. EY is particularly positive about the power garage, which says that “it is expected to more than double in 2020, from 523 MW deployed in 2019 to 1,452 MW by 2020, before tripling to 3,646 MW in 2021”.

The factors in this increase come with the U.S. Department of Energy’s launch of the Great Energy Storage Challenge, which aims to convert the U.S. In a world leader in garage use and export, with a safe domestic production chain that does not have sources of foreign fabrics. Earlier this year, a federal court also upheld Order 841 of the Federal Energy Regulatory Commission, saying that energy workshops connected to distribution should have the ability to access wholesale markets. “Order 841 is expected to open up new opportunities for developers and energy workshop aggregators that have traditionally relied on [requests for proposals] status by state,” the report says. Utilities also rely heavily on the garage. NextEra Energy plans to spend $1 billion on energy garage in 2021, while Dominion targets 24 GW of renewable energy and garage to align with Virginia’s blank energy targets.

5. Investments in infrastructure are increasing to enable the electrification of maritime transport. By 2050, the percentage of electric cars (EVs) on the road can be 65% successful in the United States, according to an EY study, compared to just 2% estimated by 2020. “Naturally, ev adoption is very important correlated with the presence of recharging of EV infrastructure, suggesting that this availability has a tendency to precede EV expansion.” Several utility companies have submitted plans for electric vehicle infrastructure programs. On July 21, utilities owned by legal investors of the New York Public Utilities Commission raised up to $701 million customers through 2025 to fund the EV Make Ready program, a cost-sharing program that encourages utility developers and charging stations to “install electric vehicles charging infrastructure in places that will maximize the customer’s benefit.”

6. Digitization, nuclear, power and production among other new technologies that have attracted the interest of investments. While transportation and garage have driven the price of global transactions into new technologies, a diverse set of generation developers has also consolidated lucrative venture capital financing. These come with suppliers of products and facilities similar to virtual and analytical products and installations; Advanced nuclear power; Efficiency and production; Counter generation (BTM); Waste energy recovery (WTE) and biofuels; and state-of-the-art hydrogen-like energy production systems or technologies.

Sonal Patel is the editor of POWER (@sonalcpatel, @POWERmagazine).

Energy Garage has been the hot topic of sun and mobility for over two years, and it’s …

A recent has revealed that electric vehicle (EV) batteries used as a virtual power plant (VPP) could …

Although experts say biomass continues to play a key role in the U.S. renewable energy portfolio for …

Leave a Comment Cancel Reply