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Renewable energy sparks new interest from investors

Australia is tipped to figure prominently in takeover activity across the power utility sector over the next couple of years as investors eye renewable energy assets and the NSW privatisation.

Pricewaterhouse Cooper’s half-yearly analysis of the Asia Pacific power sector out today says the new carbon tax and the plan to source 20 per cent of Australia’s electricity from renewable sources by 2020 is fuelling interest in renewable energy assets.

There is also a growing focus on the proposed privatisation of NSW’s remaining power stations. PwC says interest is both from Australian energy retailers and “a number of Asian players looking at the opportunity to acquire substantial generation capacity”.

Chinese companies could figure prominently as they are increasingly looking for growth offshore to make up for domestic tariff restrictions which limit their ability to pass on costs. Both Chinese and Japanese groups have been active in Australia over the past few years, including China Shenhua’s purchase of windfarms in Tasmania last year.

The value of M&A deals in the Asia Pacific sector more than tripled in the June half to $US23.6 billion ($22.6 billion) from $US7.5 billion for the same time last year. But $US12.5 billion of the latest figure was attributable to the partial nationalisation of the scandal-plagued Tokyo Electrical Power Company in the wake of last year’s earthquake and tsunami. Significantly, deal-making in renewable energy held firm during the June half at $US680 million, while the rest of the world more than halved.

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