The power and utilities sector is experiencing a notable shift, marked by a significant decline in clean energy deals this year. According to PwC’s recent report, only 13 renewable energy deals were executed between November 2023 and November 2024, a stark drop from the 27 deals made the previous year. This downturn is largely attributed to the uncertainty surrounding the upcoming Presidential election, with many investors holding their cards close to their chest.
The specter of a second Trump presidency looms large over the industry, with implications for fossil fuel investments and environmental protections. While the report hints at a potential increase in fossil fuel activities, it also underscores that renewables will still be a prime target for organic capital investment. The bipartisan Inflation Reduction Act has already catalyzed billions in domestic manufacturing investments, predominantly flowing into Republican-leaning states. This suggests that regardless of political shifts, the renewable sector remains a viable and attractive investment opportunity.
Interestingly, fossil fuel generation has seen a resurgence in activity, accounting for 19% of the total deal value over the last 12 months. This figure is nearly three times the 7% recorded in 2023. The uptick in fossil fuel deals highlights an ongoing reliance on natural gas infrastructure, particularly for peaker plants, which are essential for maintaining grid reliability. However, it’s worth noting that California just welcomed its first solar-plus-storage peaker plant, signaling a potential turning point in how energy reliability is approached.
The total number of deals tracked by PwC in the power and utilities sector fell to 30, valued at a combined $27.8 billion, down from 52 deals worth $43.3 billion in 2023. Vistra’s $6.3 billion acquisition of Energy Harbor stands out, accounting for a hefty 22.7% of the year’s deal volume. Despite the dip in overall deal activity, PwC concludes that the value propositions in the sector remain robust. Many strategic and financial investors are still keen to deploy capital, suggesting that the appetite for investment has not waned.
Looking ahead, the renewable energy sector may face short-term uncertainties, particularly regarding future federal incentives like clean infrastructure funding from the Department of Energy’s Loan Program Office. However, industry experts anticipate a more nuanced review of the Inflation Reduction Act provisions rather than a complete rollback. As the political landscape shifts, strategic due diligence will become increasingly crucial for dealmakers navigating this evolving regulatory environment.
Despite the challenges, significant deals continue to emerge. For instance, Convergent Energy and Power recently secured a financing package that will accelerate the construction of a portfolio of distributed solar and energy storage projects, with an initial funding expectation of $150 million. Similarly, Dimension Energy closed a $284 million financing package for 30 community solar projects across seven states. These developments indicate that while the market may be in flux, the drive for clean energy solutions is far from extinguished.
Investors and stakeholders must remain agile and informed about policy developments as the new Trump Administration begins to take shape. The landscape is shifting, but the commitment to clean energy persists, underscoring the resilience of the sector amidst uncertainty.
