RE M&As to be driven by Japan and China

Mergers and acquisitions will be a key driver for growth and survival in renewable energy.

A survey by accounting firm KPMG shows that Japan and China will drive M&As in the renewable energy industry in the coming years. Asian companies made 29 acquisitions in 2011 worth US$2.1 billion while Asian investments in RE during 2011 rose by over 50% year-on-year.

Survey respondents believe Chinese and Japanese buyers are likely to be the new major investors in the renewable industry in the next 18 months.

The report said Japanese trading houses and industrial corporations such as Marubeni and Mitsubishi have acquired overseas renewable energy assets over the past year. Mitsubishi said this March that it plans to acquire German North Sea offshore wind transmission assets for US$318 million.

Japanese interest in the renewable energy industry is largely driven by the desire to buy energy projects that offer long-term and low-risk returns. The Japanese are primarily interested in power projects and will continue to invest in the power business and infrastructure projects as they provide steady revenues.

Chinese investment in renewables, however, is driven by equipment manufacturers seeking to expand into new markets. Chinese outbound investment seems focused on their original equipment manufacturing players deploying their highly competitive technology into new markets.

China Datang Renewable Power Company and solar equipment maker Baoding Tianwei Baobian Electric Company formed a partnership with Sydney-based CBD Energy last year to develop US$3 billion worth of wind and solar plants.