WIND ENERGY M&A REPORT
Value Drivers and Acquisition Multiples for European & North American Wind Transactions
Following our 2008 Report, we are please to announce the release of the ‘Wind Energy M&A Report 2010, Value Drivers and Acquisition Multiples for European & North American Wind Transactions', produced by Epsilon Research in partnership with Climate Capital Ltd.
Target Audience
The Wind Energy M&A Report is targeted at the following players in the wind energy market (the ‘Wind Players’):
A) Investors and financing providers for wind farms: renewable energy funds, utilities, private equity firms, banks and other capital and debt providers;
B) Owners and developers of wind farms;
C) Advisors and research analysts: independent and banks M&A advisors, equity research analysts of renewable energy and utilities.
Report Objectives
This report focuses on analysing transaction multiples, based on public & proprietary databases. Unlike classic market research or general reports on M&A activity in the wind market, it aims to:
- Provide Wind Players with reliable benchmarks for valuing wind farms and portfolios, in tandem with other valuation methodologies (DCF, etc.)
- Segment transaction multiples for wind farms or portfolios according to development stage and analyze valuation drivers (feed-in tariffs, capacity factor, etc...) to quantify their impact on price.
- Analyze real deal and earn-out structures for early stage wind farm portfolios, providing further insight for benchmarking portfolios and structuring potential deals.
Methodology
The Wind Energy M&A Report 2010 is based on the detailed analysis of 50 European& North American wind [farm or developer] transactions announced in 2008/2009.
Purchasers of this report can access the 50 reports online via the EMAT database (Epsilon Multiple Analysis Tool™), which provides detailed and sourced multiple analysis reports (see sample below).
Our methodology is based on market practice:
- Deals are classified according to the stage of development of the wind farm or the portfolio of wind farms [from project to operation]: pipeline, in development, in construction or in operation;
- Multiples calculated are based on capacity (MW), production (MWh) and Sales (€), depending on development stage: installed, expected or portfolio capacity / production, actual or expected sales.
- Probability-Weighted Multiples, based on the probability of reaching the operational stage, have also been calculated for wind farms in early stages of development.
Key findings
- Coherent multiples were found providing a robust benchmark for wind farm portfolio valuation, at each stage of development and for each key value driver (feed-in tariffs, capacity factor)
- As expected, most of the financial value created is when a project receives all construction permits – our analysis allows to quantify that value for each stage of development and each value driver.
- Capacity multiples are higher in Europe than in North America, reflecting the difference in feed-in tariffs
- The financial crisis had a limited impact on acquisition multiples of wind farms, compared to the 2007 multiples as given in our previous Wind Energy M&A Report 2008.
This report will be updated regularly, based on new announced transactions. We intend to also publish similar reports on other climate change & environment sectors, such as Solar Energy, from 2012 onwards. Please let us know if you want to be kept informed on the planned release of these reports.