M&A International Inc. Alternative Energy M&A - Western Reserve ...

16 Alternative Energy M&A
Conclusions
The next two to three years will be interesting for the
alternative energy sector as its growth is so highly
dependent on regulatory change as well as the
increasing marginal cost of conventional
hydrocarbon production. While falling energy and
carbon prices during 2008–2009 called into question
the short-term economics of alternative energy, the
long-term outlook remains positive. The increasing
marginal cost of hydrocarbon production (driven by
greater extraction complexity and falling reserves per
well) together with technological improvements
within the sector will significantly improve the
economic case for alternative energy. This,
combined with increased regulatory support and
governmental incentives will bolster the case for
alternative energy investment.
Encouraging alternative energy through the use of
incentive mechanisms by governments worldwide
will stimulate an increase in M&A activity. We expect
the following near-term catalysts:
• Regulatory targets: Utility companies moving
to increase the volume of renewable energy
generation in their portfolios in response to
changing climate legislation.
• Constrained supply chains: In many parts of
the world, the increased number of new projects
are exerting pressure on supply chains which, in
turn, is promoting interest in M&A activity and
the development of joint ventures and strategic
alliances.
• International expansion: Underdeveloped
alternative energy capacity in several countries
offers significant potential for growth for
international buyers and domestic players.
• Buyers from outside the sector: Buyers such
as infrastructure, real estate and manufacturing
companies are increasingly pursuing M&A
activities across the alternative energy sector
value chain to ensure a sustainable business
model.
About M&A International Inc.
M&A International Inc.’s members actively represent
buyers and sellers in the energy M&A market as well
as those seeking to raise private equity and debt
capital. They possess significant energy domain
expertise, industry relationships and experience in
successfully executing complex transactions on
behalf of our clients. Our members have closed over
100 energy-related deals in the past three years.
Paul Puri
Head of M&A International Inc.'s
Energy Group
Email: paul.puri@cadallas.com
June 2010
M&A International Inc. – the world's leading M&A alliance