Ernst & Young (EY) has released a report detailing transactions in power and utilities (P&U) for Q1 2022, with data showing that the ongoing conflict in Ukraine has shifted the energy landscape significantly. Investments in non-Russian natural gas are rising and there is a renewed focus on energy supply security.
According to EY Strategy and Transactions Partner, Miles Huq, the proposed REPowerEU plan to reduce the EU’s dependence on Russian gas imports by two-thirds within a year and phase them out altogether “well before” the end of the decade will require the region to invest significantly in import capacity and pipeline infrastructure. With these plans in mind, the U.S. liquid natural gas market has skyrocketed in anticipation.
In the Americas, 33 deals were completed in Q1 2022, with a cumulative deal value of $15.5 billion. The deal value across both continents was primarily driven by the US, as it typically is, with deal value totaling up to $13.2 billion, representing 85% of the total deal value across both continents. The deal making activity in the US was the highest across the past nine quarters, driven primarily by two major multibillion-dollar deals in the gas utility and renewables segment.
The two deals referenced are Infrastructure Investments Fund’s agreement to acquire South Jersey Industries, Inc., a gas utility for $7.6 billion on February 24, and Blackstone Infrastructure Partners’ $3 billion equity investment in Invenergy Renewables on January 7. At the time on the investment, Blackstone shared that the capital would enable Invenergy to accelerate development on its 3 GW pipeline of solar and wind projects expected to be completed by the end of 2023.
The report also highlighted a number of important transactions in the renewables space, with the Americas as a while witnessing $6 billion in transactions across 20 deals in the quarter. Among these important transactions was the $775 million in equity capital investment into southern-based solar developer, Silicon Ranch, led by Manulife Investment Management, which was joined in the round by existing Silicon Ranch shareholders, including Shell, TD Greystone Infrastructure Fund, and Mountain Group Partners.
Shell invested in Silicon Ranch in 2018 and owns about 45% of the company, and the funding provided by that January 6 deal is expected to enable Silicon Ranch to build about 2 GW of solar projects by January 2025, doubling its current built capacity. Shell also shared that Silicon Ranch could be in the business of acquisition making, like its 2021 purchase of Clearloop, a company that sells carbon offsets to corporations to fund solar projects in low-income communities.
The report also highlights Montreal-based independent fund manager Axium Infrastructure’s acquisition of a 49% equity interest in a 1,415 MW portfolio of wind and solar farms in the US. The projects, all of which have already entered operation, were developed by Constellation Renewables, which retains the remaining 51% stake. The 49% stake was sold to Axium by Canada’s Manulife Investment Management, acting on behalf of John Hancock Infrastructure Fund and its affiliates.
The report also covers Brookfield Renewables’ purchase of utility scale-solar and energy storage developer, Urban Grid, and its pipeline of development-stage projects for $650 million in January. That pipeline is comprised of 1 GW of solar assets and 7 GW of battery assets, both standalone and co-located with solar. Brookfield shared that the acquisition would bring its development pipeline to roughly 31 GW, effectively tripling it.
Finally, the report also brings up the January 19 announcement from 8minute Solar Energy that it closed $400 million in financing from EIG, a leading institutional investor in the global energy and infrastructure sectors. According to 8minute, the funds will help the company to continue to operate and grow its portfolio of clean energy assets, which includes more than 18 GW of solar and 24 GWh of storage throughout California, Texas, and the southwestern United States. The investment will also will enable 8minute to focus on technology innovation and advanced solar plant design, and to begin building projects on its own balance sheet, two important developments.
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