Europe sees multi-billion euro investment wave in renewables

  • The war in Ukraine is redefining global energy markets.
  • Some believe this could mark a change in the way Europe prioritizes its energy investments.
  • 2022 has seen a flurry of multi-billion euro renewable energy contracts.

In European energy, Russia’s invasion of Ukraine has defined the market so far in 2022. Gas prices have soared, exacerbating inflation. The reaction of organisations, consumers and governments could mark the beginning of an evolution of European energy. Are renewables the way forward for Europe?

Renewed interest?

Policymakers know they need to act fast on renewables, but negotiators are already aware of the benefits. Renewable energy deals came to the fore last year, such as when Engie and Credit Agricole bought Spanish renewable energy producer Eolia for 2.2 billion euros.

The trend has continued in 2022, despite the macroeconomic turmoil that has characterized much of this year. In fact, three of the five largest energy deals in EMEA in the first half of the year fall within the renewable energy sphere.

Danish power company Ørsted has sold a 50% stake in a British offshore wind farm to French financial giants Axa and Credit Agricole for 3.6 billion euros. And private equity giant KKR was busy with two mega-deals last spring: the acquisitions of France’s Albioma for €2.6 billion and Britain’s ContourGlobal for €5.5 billion.

There have also been significant deals in the wider EMEA region: Nigerian Seplat acquired Exxon Mobil’s local offshore shallow water business, Mobil Producing Nigeria, for €1.4 billion and Abu Dhabi National Oil Company and Abu Dhabi National Energy Company have bought a 67% stake in United Arab Masdar, a renewable energy operator in the Emirates, for 1.2 billion euros.

Inevitable growth?

The need to invest in green energy has long been evident and the market is maturing rapidly. Europe is committed to its net zero targets and the activity of financial sponsors shows that they have a strong conviction in the growth of renewable energies. And Europe’s recent decision to define natural gas and nuclear as clean energy sources in the EU taxonomy should spark greater interest in these assets. Accelerated by Russia’s invasion of Ukraine, increasing M&A activity in the European renewable energy sector seems inevitable.

By sydney

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Mary I. Bruner