Energy Analytics

Do Renewable Asset M&A Multiples Point to a Bubble?


The M&A market for renewables assets gained momentum over the past decade (Figure 1), demonstrating increased interest that we attribute to cost declines, stricter government policy and growing societal support. Recent high-water mark deal multiples of $8-$10 million/megawatt (MW) observed in the North Sea raise the question of whether renewable asset valuations are floating in a bubble.

Improvements in asset performance and declining costs in the renewables space are the same characteristics that drove a “hype curve” in shale plays like the Delaware Basin in Texas and New Mexico, which at its peak saw a fivefold appreciation in land value as buyers grew comfortable with increasingly aggressive M&A multiples. But our analysis of ~$130 billion of solar and wind transactions since 2010 revealed a surprisingly stable average multiple of ~$3.5 million/MW. Since most transactions occurred during or after construction once the distribution of future cash flows was established, little room was left  for asset value speculation.

While the North Sea’s $8-$10 million/MW benchmark may seem exuberant at first, we believe it is justifiable based on certain legacy programs that set high prices to encourage the development of power generation projects from renewable energy sources. Our analysis of the levelized cost of energy, which measures the cost to generate power over a plant’s lifetime, for U.K. wind farms alongside policy-set pricing showed $100/megawatt hour spreads through the back half of the last decade – bringing multiples of $10 million/MW into the money. However, this price-setting mechanism has since been discontinued in favor of a competitive bidding process, which we believe will eliminate the spread and cause M&A multiples in the region to converge towards $3 million/MW – on par with industry average. Click here to learn more about Enverus’ Intelligence solutions.

FIGURE 1 | Renewable Asset Generation Deals Over the Past Decade



Energy’s most trusted SaaS platform — creating intelligent connections that uncover insights and opportunities to deliver extraordinary outcomes.

Subscribe to the Enverus Blog

A weekly update on the latest “no-fluff” insight and analysis of the energy industry.

Related Content

Energy Transition
ByCarson Kearl

In a world where energy value can make up a small portion of the revenue stream from emerging business models, what else is at play? Enverus Intelligence Research® views effective energy transition business as taking advantage of two key additive...

Intelligence Oilfield Services
ByErin Faulkner

Permitting information for oil and gas wells is one of the most readily available and least lagged pieces of data on industry activity, but it is often seen as a poor indicator of future drilling activity.

Enverus Press Release - Exploring falling rigs and rising production
Energy Analytics Minerals

While horizontal drilling and hydraulic fracturing significantly enhance well productivity, they have had the opposite effect on the land department.

ByJoseph Gyure, Editor, Enverus Intelligence

All seven regions covered by the Enverus Day Rate Survey saw rates rise sequentially for the second time in three months in January as confidence started to strengthen among U.S. land drilling contractors.

Energy Transition Intelligence
ByJoseph Gyure, Editor, Enverus Intelligence

Ørsted took a blade to its project pipeline, reducing its ambition to 35-38 GW of installed capacity by 2030 from the previous 50 GW.

ByJoseph Gyure, Editor, Enverus Intelligence

SLB has reaffirmed its 2024 financial guidance, part of an effort by international oilfield services companies to reassure investors after the Saudi Ministry of Energy called off plans to increase its maximum sustainable capacity by 1 MMbo/d to 13 MMbo/d...

Analyst Takes Energy Transition

Despite the relatively scant incentives for buying an EV in the U.S. compared to other countries, the U.S. Environmental Protection Agency (EPA) presented its plan in 2023 to tighten tailpipe emissions regulations.

Enverus Blog - Increase visibility and efficiency with OpenTicket Mobile digital field ticketing software
Trading and Risk

Amid significant volatility in global energy markets, U.S. President Joe Biden’s decision to temporarily halt approvals for pending liquefied natural gas (LNG) projects seems to defy conventional trading wisdom. This audacious move has given rise to a variety of viewpoints...

Enverus Blog
Intelligence Trading and Risk

In the ever-changing energy landscape, understanding market fluctuations, weather conditions and system resilience is paramount when factoring ideas for trading opportunities.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Sign up for our Blog

Register Today

Get Energy Transition Research updates straight to your inbox by filling out the form below.

Sign Up

Power Your Insights

Connect with an Expert

Access Product Tour

Speak to an Expert