Renewable energy is a prominent sector within the wider infrastructure asset class, with renewable energy deals contributing significantly to annual infrastructure deal flow. Preqin’s infrastructure deals module on Infrastructure Online features extensive information on over 2,100 renewable energy deals made globally since 2007, representing an estimated aggregate deal value of $591bn. Within this space, North America is a growing market for renewable energy with assets located in the US and Canada accounting for a sizeable 30% of the renewable energy deals completed worldwide so far in 2014.
The number of North America-based renewable energy deals completed annually has increased steadily in recent years, from 47 transactions completed in 2009 to 103 completed deals in 2013. Annual estimated aggregate deal value for renewable energy deals completed in North American assets has also grown over the past few years, climbing from $11bn in 2009 to $20bn in 2012, but falling back to $15bn in 2013. So far in 2014, 46 North America-based renewable energy deals have been reported representing an estimated aggregate deal value of $9bn, but this will increase as more information becomes available.
Renewable energy deal sizes are generally on the lower end of the scale compared to other infrastructure sectors such as transportation and utilities. On average, 64% of deals completed in North American renewable energy assets since 2012 are valued at less than $200mn, while just 6% are valued at more than $500mn. In 2014 to date, 54% of North America-based renewable energy transactions are valued at less than $200mn, while 38% are valued at between $200mn and $499mn.
In terms of specific sub-sectors, wind and solar power are the most prominent industries in terms of renewable energy deal flow worldwide. The North American market mirrors this trend with wind (50%) and solar power (31%) assets accounting for a significant 81% of total deals completed in the renewables space since 2012. Hydro power assets also feature strongly, accounting for 12% of all renewable energy infrastructure deals completed during this period, while biomass/biofuel assets represent a further 4%. Other sub-sectors such as geothermal power account for an additional 3% of transactions. Fifty-three percent of North America-based renewable energy deals finalized since 2012 were in developmental greenfield projects, while a further 41% were in mature secondary stage assets.
Several notable transactions have been completed in renewable energy infrastructure assets located in North America so far in 2014. In Pennsylvania, Brookfield Asset Management (via Brookfield Renewable Energy Partners) acquired a 33.33% stake in the Safe Harbour Hydroelectric Power Plant from LS Power Group in February for $289mn. Brookfield later went on to acquire the remaining 66.67% interest in the facility for an undisclosed amount in May. In Canada, a consortium comprised of EDF Energy, Fengate Capital Management and Veolia Environnement purchased the rights to develop the Merritt Green Biomass Power Plant for C$235mn in July.