The smog that afflicted a huge part of China in early 2017 – some 24 cities issued the highest ‘red alert’ for pollution – was a graphic illustration of the need to drastically reduce coal-fired electricity generation in emerging economies.
In fact China has rapidly become a global leader in the development of clean power and low carbon forms of energy. It increased investments in green technology overseas by 60% to almost $32bn in 2016, while it is investing more than $100bn a year in domestic renewable energy projects1. Production from renewables, led by wind power, has tripled in the country over the last five years.
The shift is no less pronounced in Western economies. For instance, last year the UK generated more electricity from wind turbines than from burning coal for the first time2, while in Germany – where investors in green energy are guaranteed that their electricity will be fed into the grid – the share of renewable electricity generation has soared to more than 30% and the government’s target is to generate at least 80% of its electricity from renewables by 2025. The EU as a whole has a target of providing 50% of electricity from renewables by 2030.
The winds of change have also spread to the Middle East. Earlier this year Saudi Arabia announced it would start issuing tenders for a big solar and wind power programme worth €28bn-€46bn as part of its plan to be a “solar powerhouse” and diversify the economy away from crude oil production.
The market continues to grow fast across the world. In the US it is estimated3 that it grew by 119% in 2015 and that 16GW of solar was installed last year, double the 2015 figure.
Latin America is a particularly big producer of solar energy because of its benign weather systems. For instance, last year the huge El Romero plant was opened in Chile capable of generating up to 196MW (megawatts) of electricity, enough to power a city of a million people. Interestingly, a third of its output is being bought directly by Google’s Chilean subsidiary. In 2014 Latin America produced more than half of its electricity from renewable sources4, compared with a world average of 22%.
In 2016, the global wind market was more than 54GW, bringing total global installed capacity to nearly 487GW5. The market was led by China, the US, Germany and India, while countries such as France, the Netherlands, the UK and Turkey are also rapidly growing their industries.
For instance, last year Siemens opened a €365m wind turbine blade factory on the east coast of the UK, while a consortium led by Royal Dutch Shell recently won an auction for the rights to build a new 700MW phase of the Borssele wind farm off the Netherlands.
Wave and tidal
Oceans could prove to be our largest reserves of sustainable energy with predictions that the global wave and tidal energy market could be worth as much as $11.3bn by 20246. However, at present only tidal barrages are capable of generating returns on investments through the sale of electricity, while tidal stream and wave power plants are not capable of generating power at grid parity levels.
But there are plenty of innovators operating in the market such as Australian company Carnegie Wave Energy which plans to build the first commercial wave energy project connected to the electricity grid in the UK. Another company, Tidal Lagoon Power, is planning a €1.5bn tidal scheme in Wales.
Royal Dutch Shell’s venture capital arm Shell Technology Ventures (STV) recently announced an investment with E.ON and Schlumberger in a form of wind power that uses high-altitude kites to harness energy. The three companies have taken a stake in UK-based Kite Power Systems which is working on capturing wind power through airborne kites tethered to the ground. STV says kite power has the potential to be a game changer in renewable energy as traditional wind power is less efficient because it requires a lot of steel infrastructure.
1 Institute for Energy Economics and Financial Analysis
2 Carbon Brief
3 GTM Research
4 International Energy Agency
5 Global Wind Energy Council
6 Transparency Market Research
Some of our recent deals
Clearwater International advises Ratos on the divestment of AH Industries
Clearwater International Denmark acted as financial advisor to Sweden-based Ratos, and the joint shareholders, in the divestment of AH Industries (AHI) to AURELIUS .
Denmark-based AHI is a major supplier of metal components, modules, systems and services to the wind turbine, cement and minerals industries. With established production in both Europe and China, AHI procures, manufactures and assembles tailor-made solutions globally. AHI is structured into three business areas; manufacturing solutions – this includes contract manufacturing that focuses on machining of heavy components that are primarily for the wind turbine industry such as rotor housing and hubs; industrial solutions, which supplies components to the cement and mineral industries, often in the form of modules or system solutions; and site solutions, which supplies services and lifting equipment to turbine manufacturers and wind park owners. Read more about this deal.
VERDO acquires Danish renewable energy company, Industrivarme A/S
Clearwater International has advised Private Equity backed Industrivarme A/S (Industrivarme) on its sale to the Danish utility company VERDO S/I (Verdo). The sellers include Vækst-Invest Nordjylland and key members of the management team. Industrivarme is a designer, manufacturer and installation service company, within renewable energy solutions such as solar heating systems, heat pumps, and biomass boiler plants for the district heating and industrial sectors. Industrivarme, during recent years, has experienced remarkable growth in revenue and profits, earning them the place as the leading company within its field in Denmark. Read more about this transaction.
Clearwater International advises on sale of APRO Wind A/S (DK) to Via Venture Partners (DK)
Nordic private equity group, Via Venture Partners (DK), have acquired APRO Wind A/S (DK), a prominent installation and services provider to the global on- and offshore wind industry in a sale advised by Clearwater International. APRO Wind will be added to VBE Holding, who also own VB Enterprise A/S (DK), a global leading services provider to the offshore wind industry. Based in Jutland, Denmark, APRO Wind was founded in 1998 by Lauge Fredhave, and was later joined by 50% owner, Henrik Møller Jensen. The company employs around 200 employees and performs mechanical installation and service tasks for wind turbines manufacturers and park owners, globally. Read more about this deal.