Monthly Deal Round-up for August 2022 – Renewable Energy deals, by Wesley Johnson
O&G independents are receiving a long-awaited economic boost with renewed investment appetite from lenders. According to a recent article by the Financial Times, 7 of the 10 best-performing stocks on London’s junior AIM market are fossil fuel companies.
The unfortunate situation in Ukraine and subsequent energy shortages seem to be driving this renewed investment appetite. After recent years of operating in an increasingly restrictive environment as a result of the global pressures to shift towards cleaner energies and lower for longer oil prices, I am sure this will be a much-welcomed ray of sunshine for many lenders and O&G producers.
However, this much-welcomed economic boost for the oil and gas industry is causing slight concern amongst climate activists who believe that this will hinder the deployment of investment into clean tech and veer us off our path to net zero.
Irrespective of this current capital injection for the O&G industry, a recent report by IHS Markit highlighted that there is just not enough capital currently being deployed into cleantech to be certain that we will reach net zero by 2050. In a study by PLOS ONE, it was revealed that between 2010 and 2018 super majors including the likes of BP, Shell and ExxonMobil did not deploy more than 4% of their capital expenditure on cleantech.
According to a report from IHS Markit, this trend is likely to continue as oil and gas producers continue to enjoy higher profitability in rising oil and gas prices.
However, with more and more public and private funders redirecting their funds to cleaner energies, this can only lead to suggest that this honeymoon period for oil and gas producers will probably be short-lived. Some examples include the US joining 25 countries pledging to end public finance for unabated overseas fossil fuel projects during Cop 26 last year. Furthermore, there are now 116 banks across 41 countries with a total asset base of $70 trillion that have joined the Net Zero Banking Alliance and pledged to align their lending and investment portfolios with net zero emissions by 2050.
Further to the above, according to the IEA’s 2022 world energy investment report, the world of cleantech investment still seems to be on track to top a record $1.4 trillion by the end of this year, but is this enough?
One thing is for certain, our current situation has set itself up for what’s to be a very interesting debate at this year’s COP 27 in Egypt.
Returning to the monthly deal round-up below, I have highlighted my top pick of clean energy investment deals for August.
- Encavis buys 48MWp Dutch solar trio from BayWa r.e.
German solar and wind farm operator Encavis AG has acquired a 48 – MWp portfolio of three solar parks in the Netherlands from BayWa r.e. AG. With this latest acquisition, Encavis has augmented its generation capacity in the Netherlands to 228 MWp. The value of the transaction was not disclosed.
- Albioma acquires six photovoltaic power plants in Brazil
French independent renewable energy producer Albioma has acquired a 31.6 – MWp portfolio of Photovoltaic parks in Brazil. The acquisition of this portfolio marks Albioma’s entry into solar power in Brazil, a business with strong growth potential and which complements its existing assets.
- Octopus Energy Group launches €220 million green energy fund to reduce Europe’s gas reliance
UK Octopus Energy group has launched a €220 million green energy fund and announced its first investment in UK renewables developer Exagen to build new green energy and grow the UK’s energy storage capacity. The “multi-million-pound deal,” includes the acquisition of a 24% stake in Exagen and an option to purchase a 500-MW/1-GWh battery in the Midlands, England, slated to go live by 2027 as the largest in the UK. Under the deal, the fund has also acquired three solar projects with batteries totalling about 400 MW in the Midlands and North East of England that is being developed by Exagen.
- India’s ReNew lands $1 billion loan for hybrid project with Mitsui
ReNew Energy Global has secured a $1 billion project finance facility to build out 1.3GW of Hybrid wind and solar farms in India. Renew has signed a PPA with the Solar Energy Corporation of India on the project, which is 49% owned by Japanese investor Mitsui.
- Shell Plc closes $1.55 billion acquisition of India’s Sprng Energy
Shell has completed the acquisition of Indian renewable energy firm Sprng Energy in a deal worth $1.55 billion from Actis Solenergi Ltd. This acquisition will triple Shell’s renewable capacity in operation and help it achieve its target of becoming a profitable net-zero energy business by 2025.
- IHC acquires Kalyon Energi for $490 million
Abu Dhabi’s International Holding Co has acquired 50% stake in Turkeys Kalyon Holding, which has interests in construction, energy and aviation. This transaction marks IHC’s second-largest acquisition in the renewable energy space and includes solar power projects in Turkey’s Karapinar and Gaziantep regions and a wind power project in Amkara.
- Swedish start-up H2 Green Steel has raised €190 million in Series B funding
H2 Green Steel has raised €190 million from a group of investors for building a fossil fuel-free steel plant in the North of Sweden. H2 Green Steel plans to have an annual production capacity of 5 million tonnes of green steel by 2030 which could reduce 95% of CO2 emissions compared with normal steel making.
- Canada’s Omers injects $100 million into NovaSource Power
Omers Private Equity, the investment arm of Omers, announced that it has acquired a minority stake in Novasource Power Services. Novasource is the largest independent Solar O&M provider in the US and globally. The proceeds of Omer’s investment will be used to finance NovaSource’s continued growth.
- Shell New Energies is in the process of buying a 100- MW solar project portfolio in Wales and England from Anesco Ltd
Shell is in the process of purchasing four solar farm projects currently being developed by Anesco, to help meet the growing demand for renewable power in the UK.
- Octopus Renewables invests in a 48-MW unsubsidised wind farm in Scotland
Octopus Renewables is to acquire 51% ownership interest in the Crossdykes wind farm in Scotland. The remaining 49% is to be acquired by another Octopus managed fund. Upon completion of this acquisition, Octopus Renewable’s operational portfolio will have a capacity of 608MW, with 3 assets currently under construction.
- Windlab sells its African business to Seriti Resources for $55 million
Privately owned Seriti, a major coal supplier to South Africa’s state power utility Eskom, plans to buy a 51% stake in Windlab Africa’s wind and solar energy assets for $55 million. This is the first part of Seriti strategy to become an energy company, moving towards lower carbon technology with capital from coal.
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