Global power deals gathering steam, says PwC

Our Bureau Mumbai | Updated on March 09, 2011

The global power deal market is seeing an upward trend in momentum from the lows reached in 2009, according to PwC (PricewaterhouseCoopers International).

The total deal value in the power and gas utilities sectors (excluding renewables) is up 19 per cent year-on-year from $98 billion to $116 billion in 2010.

Compared to the power deals transacted between 2005 and 2008, deal values remain low but conditions are in place for a return at least to the foothills of these peaks, PwC's annual power deals review said.

The globalisation of the power sector is moving forward on a number of fronts with companies looking at gaining a larger presence in growth markets, strong international interest in infrastructure assets and signs of greater Chinese involvement, not just from grid companies but also independent power producers.

Expansion remains high on the agenda for a number of European companies as they weigh moves to step up their international presence. For example, IP (International Power) and GDF Suez have signalled that their merger will result in an initial period of rationalisation across their combined portfolio, followed by expansion in key growth markets. Additionally, E.ON could make the first moves in its growth market strategy.


Mr Kameswara Rao, Leader-Energy and Utilities, PwC India, said, ?Indian companies' interest in global power deals remains lukewarm, as they have preferred to invest in resources instead, especially thermal coal to meet their growing domestic requirements. However, with divestments expected in various parts of the world as Governments seek to free up capital, we could see a selective Indian interest in regulated utility deals.?

Within the country, the deal activity will gain further momentum as international investors and funds buy into portfolio of lower-risk developed projects, as Indian promoters divest partial stake to fund new plans.

In fact, 2010 has set a trend for this and we have seen major international investors return to invest in conventional power plants, he said.

In renewable energy, a quiet but vibrant resource consolidation and reallocation is taking place with deals involving wind areas, hydro sites and biomass.

?We are at a critical point now and the course of renewable regulations, especially with regard to mandatory procurement obligations and activation of the REC market will significantly determine market activity,? he said.

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Published on March 09, 2011
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