Deal volume also experienced a minor decline quarter-over-quarter with 102 deals in Q3, down from 128 in the second quarter of the year. Fifty-three percent of total global deal volume came in the form of renewable energy assets valued at US$7.9b.
Matt Rennie, EY Global Power & Utilities Transactions Leader, says:
"Regulated network and grid assets offer stable cash flows to investors looking to weather short-term uncertainty caused by ongoing commodity price volatility and recent depressed electricity demand. A closer look at smaller transactions in the sector reveal, however, that major utilities are looking beyond safe bets and investing in a new energy future."
Transactions involving disruptive technologies are gaining momentum, particularly in Europe and Asia-Pacific. During the first nine months of 2016, we have seen close to US$2b worth of disruptive deals involving acquisition of rooftop solar, battery storage and smart meter assets by both corporate and financial investors. Oil and gas companies too are increasingly diversifying into the P&U sector, particularly into the battery storage segment, contributing over US$1b of the total deal value attributable to disruptive technologies this quarter.
The appetite to invest in disruptive technologies stems from digitization and sector convergence, increased competition from companies outside the sector — cited as the first and second most prominent items on utilities' boardroom agendas over the next six months, according to the EY Power & Utilities Capital Confidence Barometer.
Rennie says: "Utilities are facing competition from new players in areas such as energy management and the connected home. That, coupled with the emergence of innovative products and business models, is persuading utilities to explore mergers and acquisitions opportunities to acquire the necessary capabilities to stay competitive. Battery storage, big data analytics and home automation are just some of the areas where we expect utilities to target acquisitions."
Investment in the areas of battery storage and software solutions start-up is expected to continue as utilities seek to optimize their business portfolios in response to transformation within the sector. Forty-seven percent of utilities plan to actively pursue acquisitions over the next 12 months.
Notes to Editors
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.
About EY's Global Power & Utilities Sector
In a world of uncertainty, changing regulatory frameworks and environmental challenges, utility companies need to maintain a secure and reliable supply, while anticipating change and reacting to it quickly. EY's Global Power & Utilities Sector brings together a worldwide team of professionals to help you succeed — a team with deep technical experience in providing assurance, tax, transaction and advisory services. The Sector team works to anticipate market trends, identify their implications and develop points of view on relevant sector issues. Ultimately, this team enables us to help you meet your goals and compete more effectively.
For more information, please visit ey.com/powerandutilities.
About the report
Power transactions and trends combines global transactions trends with current power and utilities' asset valuations and insight to help clients make informed, strategic decisions about capital investment in the sector. It explores the outlook for utilities, investors and sector participants.
The analysis and perspectives within Power transactions and trends are based on global financial releases, and Mergermarket data, as well as global engagements conducted by EY member firms.
EY Global Media Relations
+44 (0) 20 7951 6563
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/global-power-and-utilities-deal-value-falls-for-fourth-consecutive-quarter-in-q3-2016-300365829.html