GLOBAL ENERGY INSTITUTE

Green Energy 2014 Renewable Energy M&A in the United States and Canada

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A research report from

Contents Foreword.................................................................................................................... 1 Executive summary.................................................................................................. 3 The evolving renewable energy M&A landscape................................................. 4 Looking in the rear view mirror: the main M&A trends in 2013 M&A activity poised to keep growing Who’s buying and selling?....................................................................................... 6 The rise of the YieldCo Institutional investors warming to renewable energy assets Utilities and IPPs still acquiring renewable energy assets European utility divestments slowing Focusing on deal terms.......................................................................................... 11 Liquidity back at 2007 levels New investors compressing returns Solar in focus........................................................................................................... 13 United States – M&A opportunities a plenty Canada – opportunity limited to Ontario Wind in focus........................................................................................................... 15 United States – PTC uncertainty to catalyze M&A activity Canada – Ontario and Quebec offer immediate investment opportunities

Foreword Over the last few years we have seen a strong evolution in the renewable energy sector, from investment value being created upstream and throughout various elements of the supply chain, to value being more concentrated downstream at either the project level, or developers and/or financiers enabling utility and distributed generation assets. The ongoing attractiveness of investment yield associated with renewable generation assets is fueling continued capital flows into projects and pipelines of projects. These capital flows have been evident in new investment vehicles into the sector as well as ownership of assets flipping to utilities, IPPs, banks, or investment funds with lower costs of capital. While players downstream are benefitting from efficient capital markets, they are also facing challenges associated with declining PPA prices and the uncertainty of looming regulation, specifically in distributed generation solar.

challenges that are leading to both consolidation and rationalization. New venture capital investment into the sector has slowed and focused on funding existing portfolio companies. Corporations in the United States, Europe, and Asia are benefitting from the opportunity of buying advanced technology, which they expect to leverage their manufacturing and distribution expertise to commercialize and deploy.

biofuels with interest now waning with limited commercial success beyond some of the initial ethanol and biodiesel players. Some of that investment and acquisition appetite has been captured in nextgeneration bio-materials, which still show significant promise in the market place. We expect to continue to see activity in certain subsectors such as energy storage, smart grid, and hybrid and electric vehicles. We would like to thank everyone who participated in this survey and the interviewees that have given up their valuable time to contribute to the report. We would also like to thank Clean Energy Pipeline for assisting us in producing this report. We hope you find it insightful.

While there is more clarity downstream, technology providers upstream and the broader Cleantech landscape continue to face commercialization and financing

Subsectors of interest within Cleantech have gone through various volatilities. We saw significant interest initially in solar at the wafer, cell, and module level go through tremendous peaks and valleys, only to finally stabilize with fewer global play