Acquisition activity up for North American utilities
Merger and acquisition activity in the North American power and utilities industry increased in the fourth quarter of 2013 on both a year-over-year and sequential quarter basis as companies continued reshuffling portfolios with a focus on their core businesses and strategic opportunities.
There were 14 power and utilities transactions greater than $50 million in the fourth quarter of 2013, compared to 12 deals in the previous quarter and 13 during the fourth quarter of 2012. Bolstered by two large corporate deals worth nearly $7.4 billion, fourth quarter deal value reached $10.3 billion, more than doubling the deal values of third quarter 2013 and fourth quarter 2012.
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“Closing out the year with such a high level of activity is a positive sign for 2014 deal activity. Investors continue to be attracted to assets that generate strong yields, and combined with cash on the sidelines, sellers are seeing this as a good time to bring assets to market,” said Jeremy Fago, PwC's U.S. power & utilities deals leader. “We're also seeing increased activity around assets in regions of tightening supply and demand dynamics, as well as those fitting the YieldCo investment profile.”
Strategic investors accounted for 93 percent of deals greater than $50 million announced during the fourth quarter, compared to 72 percent in the third quarter, with financial investor activity carrying out the remaining 7 percent of deals.
“Private equity players have been focusing on regions with tightening supply, specifically Texas, for opportunities in the generation side of the business and to expand their power and utilities portfolio,” added Rob McCeney, PwC US energy & infrastructure deals partner.
Six alternative power deals in the fourth quarter marked a high for the year. While these transactions had smaller deal values, they showed there is an interest in alternative deals, especially wind related transactions.
Hydrostor receives $4m funding for A-CAES facility in Canada
Hydrostor has received $4m funding to develop a 300-500MW Advanced Compressed Air Energy Storage (A-CAES) facility in Canada.
The funding will be used to complete essential engineering and planning, and enable Hydrostor to plan construction.
The project will be modeled on Hydrostor’s commercially operating Goderich storage facility, providing up to 12 hours of energy storage.
Hydrostor’s A-CAES system supports Canada’s green economic transition by designing, building, and operating emissions-free energy storage facilities, and employing people, suppliers, and technologies from the oil and gas sector.
The Honorable Seamus O’Regan, Jr. Minister of Natural Resources, said: “Investing in clean technology will lower emissions and increase our competitiveness. This is how we get to net zero by 2050.”
A-CAES has the potential to lower greenhouse gas emissions by enabling the transition to a cleaner and more flexible electricity grid. Specifically, the low-impact and cost-effective technology will reduce the use of fossil fuels and will provide reliable and bankable energy storage solutions for utilities and regulators, while integrating renewable energy for sustainable growth.
Curtis VanWalleghem, Hydrostor’s Chief Executive Officer, said: “We are grateful for the federal government’s support of our long duration energy storage solution that is critical to enabling the clean energy transition. This made-in-Canada solution, with the support of NRCan and Sustainable Development Technology Canada, is ready to be widely deployed within Canada and globally to lower electricity rates and decarbonize the electricity sector."
The Rosamond A-CAES 500MW Project is under advanced development and targeting a 2024 launch. It is designed to turn California’s growing solar and wind resources into on-demand peak capacity while allowing for closure of fossil fuel generating stations.
Hydrostor closed US$37 million (C$49 million) in growth financing in September 2019.