Renewables set to continue growth

Jan 30 2012

Scotland's renewables sector will continue to grow in value this year despite economic uncertainty, an industry analyst has said.

The growth will follow a worldwide trend that has seen the value of mergers in wind, solar and biomass technologies rise by 40%.

A study by PricewaterhouseCoopers (PwC) found that deal values rose from 38.2 billion dollars (£24.3 billion) in 2010 to a record level of 53.5 billion dollars (£34.04 billion) in 2011. In Europe, the volume of deals declined by 6%, but the overall value rose from 16.7 billion dollars (£10.62 billion) to 30 billion dollars (£19.09 billion).

Jason Morris, partner and energy and renewable analyst at PwC, said: "As the renewable and clean energy sector continues to mature we are seeing evidence of more dealmaking activity, not only on the global stage but in Scotland and the UK, a trend that will continue in the medium term.

"Scotland has nailed its colours to the mast in terms of the renewable sector and energy efficiency, both in terms of Scottish Government policy and ongoing lobbying to bring the Green Investment Bank to Edinburgh, and the benefits are trickling through."

Mr Morris said that the approval last week of £7 billion of investment by Scottish and Southern Energy and Scottish Power to upgrade its network infrastructure to support the renewable sector was evidence of the confidence in the industry.

The PwC global report found the green energy industry has benefited from a reluctance in many countries to rely on nuclear energy after the Fukushima emergency in Japan. However, the windpower sector could decrease in size, according to the report, as firms merge in order to create the large reserves of funds needed to invest in new projects.

Mr Morris said: "As offshore wind projects increase in size, the need for a strong balance sheet to support the technology and investment required becomes more important.

"The entry of Repsol to the Scottish offshore wind market after acquiring the stakes in Round Three Wind Farms held by Sea Energy demonstrates the type of transaction this will drive.

"Many of the power companies will continue to sell down their stakes in both new and existing projects to free up balance sheet capacity for future investment."