Utilities and financial investors are investing in renewable energy, especially hydrogen, like never before – pv magazine USA

23 November 2021 Tim Sylvia

Ernst & Young (EY) released a report detailing transactions in the electricity and utilities (P&U) sectors for the third quarter of 2021, which shows utilities are providing significant financial support to their environmental, social initiatives and governance (ESG). Investments in gas and electricity networks, energy transition in the broad sense and energy services; including storage, electric vehicles and waste-to-energy, accounted for $ 57.2 billion of the quarter’s total of $ 72.8 billion in transaction value.

This trend towards a greater emphasis on renewable agreements began to intensify in the first half of 2020. Miles Huq, EY Strategy and Transaction Partner, in previous conversations with pv magazine, individual transactions in the field of renewable energy are generally lower in value, so the total value generated by these transactions shows continued investor confidence.

This mark of $ 72.8 billion in transaction value represents the highest level of investment in the past eight quarters, showing the potential for a return to pre-pandemic levels of business activity. Private investors acquired $ 8.3 billion in renewable assets in the third quarter, compared with $ 3.2 billion in acquisitions by financial investors.

There were 53 deals in the Americas, which includes Central and South America, with a cumulative value of $ 23.9 billion, an increase of 69% from the second quarter. Value has been driven by very large “mega-deals” in energy services and network assets. Renewable assets generated the volume of transactions with 17 transactions.

The report also claims that utilities are trying to sell off their fossil fuel production assets, focusing instead on keeping nuclear, renewable and regulated activities in their portfolios. In return, financial investors jump on discounted assets that are essential to the stability of the network. To illustrate this point, the authors indicate that the Public Service Enterprise Group sold its 13 gas-fired power plants to ArcLight Capital, a private investor, for $ 1.9 billion against a book value of $ 4.5 billion.

And while the emerging climate and renewable technologies have historically been slow to attract significant investment activity, that narrative could change, as the third quarter saw significant investments in hydrogen technologies. According to the report, gas utilities are increasingly betting on hydrogen to help them transition to clean energy companies.

For example, the report states that Avangrid has announced plans to build a 20 MW electrolyzer and hydrogen storage facility for its Connecticut gas and power utilities, powered by renewable energy from offshore wind. Across the country, US utilities have announced more than 26 hydrogen pilot projects.