Wind Power Drives Renewable Energy Deals in Emerging Markets – August 2015

by Benjamin Taylor

  • 03 Aug 2015
  • INF
  • NR

Renewable energy is a sector traditionally associated with developed economies, as these countries increasingly look to secure their energy resources and lessen their dependence on fossil fuels. However, emerging markets* represent an increasingly targeted area for renewable energy investment as these economies have set ambitious renewable energy targets over the next five to 10 years. Preqin’s Infrastructure Online currently profiles 470 completed renewable energy deals that have taken place within emerging markets, which represent 14% of completed global renewable energy transactions.

As shown in the chart above, as few as 18 deals were struck in 2007, representing an estimated aggregate deal value** of $4.3bn. The number of renewable energy-focused deals within emerging markets reached its peak in 2012, when 73 deals were completed worth an estimated deal value of $22bn. While 2013 experienced a decline from the previous year, both the value and number of deals has remained consistent through to 2014. 

The lack of established infrastructure in some emerging markets has meant the majority (61%) of renewable energy deals in these regions take place at the greenfield stage of development, with 31% at the secondary stage. The proportion of projects that were at the greenfield stage of development has also grown year-on-year in the period 2007-2015 YTD, rising from just 22% of completed deals in 2007 to 63% in 2014, and now standing at 73% in 2015 so far. 

Since 2007, India has seen the most renewable energy investment of all emerging markets, representing 17% of completed deals in the period, with this level of investment expected to continue following Naharendra Modi’s plan for India to have 100 GW of solar energy capacity by 2022. Thirteen percent of renewable energy infrastructure deals were based in Turkey, which also pledged to increase its renewable energy capacity by 2023. Solar assets amounted to only 18% of the renewable energy assets invested in since 2007, with both hydro power (28%) and wind power (36%) investments more desirable to investors. 

* Preqin’s Emerging Market Index is composed of the following countries: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Malaysia, Mexico, Morocco, Myanmar, Pakistan, Peru, Philippines, Poland, Romania, Russia, South Africa, South Korea, Taiwan, Thailand, Turkey and United Arab Emirates. 

**Preqin’s estimated deal value is calculated using the total reported value of all deals where this is known, plus the average deal value for transactions where a deal size has not been disclosed.

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