Global power and utility deals drop to lowest quarterly level since 2012: EY

[LONDON] Merger and acquisition (M&A) deals involving global power and utility companies fell to their lowest quarterly level since 2012 in the first three months of 2019, Ernst & Young (EY) said on Thursday.

The total value of global deals in the sector was US$20.6 billion in the first quarter, down almost 80 per cent from a record high of US$97 billion in the same January to March period of 2018, EY said in a report.

The risk of an economic slowdown had hurt activity, it said, adding most transactions were in renewable energy, with deals worth US$12.7 billion accounting for 61 per cent of the total.

"The outlook for renewable energy transactions looks very positive because we expect the clean energy market to continue to expand and attract investment from a variety of stakeholders," said Miles Huq, the leader for global transaction advisory services power and utilities at EY.

Governments continue to put pressure on investment in fossil fuels. Germany aims to close its 84 coal-fired power plants by 2038, while Norway has proposed phasing out investments in oil and gas exploration firms from its US$1 trillion sovereign wealth fund.

The Americas was the largest region for power and utility deals, accounting for deals valued at US$9.1 billion, but this was 35 per cent lower than the fourth quarter of 2018.

The value of Chinese deals fell 45 per cent lower compared with the fourth quarter, reaching US$4.1 billion, while the value of deals in Europe fell 27 per cent to US$6.8 billion compared to the last three months of 2018.

REUTERS