As shown in the chart above, Europe is the most prominent region for hydro power investment, accounting for 39% of all hydro power deals completed worldwide since 2005. Within Europe, Sweden is the top destination for investment, with approximately 30% of all Europe-based hydro power deals taking place in the country. Following Europe, North America hosts the next highest proportion of completed hydro power deals, representing 28% of the market.
Over the last 10 years, the number of completed hydro power deals has fluctuated dramatically. In 2005, just 14 deals involving hydro power were completed with an estimated aggregate capital of $3.1bn. This grew to a high point of 94 deals representing an estimated $48bn in aggregate capital. The period 2014-2015 YTD has witnessed 32 transactions reach financial closes, with an estimated aggregate capital of $11bn. However, this figure is expected to increase dramatically as more deals come to light in the coming months.
Of all hydro power deals made globally since 2005, 55% were at the secondary stage of development when the deal was struck, 39% were at the greenfield development stage and the remaining 6% were at the brownfield stage. However, throughout the period 2005-2015 YTD, the proportion of deals closed with the asset at the greenfield stage of development has grown substantially, year on year. In 2008, just 14% of all hydro power deals completed were at the greenfield stage of development, compared with 44% of the transactions for new-build hydro power assets in 2014. This is perhaps the result of the diminishing supply of natural resources, therefore inciting an increasing global demand for new-build, alternative sources of energy.
A number of notable transactions have been completed in the hydro power sector worldwide over the last year. In February 2015, the £1bn Tidal Lagoon Swansea Bay project in the UK was financed by InfraRed Capital Partners and Prudential M&G, along with debt providers. This project will be the world’s first man-made, energy-generating lagoon. Within the US, ISQ Global Infrastructure Fund has completed two secondary stage deals in 2015, acquiring majority stakes in Lyonsdale Hydro and Little Falls Hydro. These two hydroelectric power plants generate a combined 16.6 MW within the state of New York.