Ever since the ill-fated nuclear reactors in Japan began to partially melt in the wake of the earth quake and tsunami, renewable energy like solar and wind has enjoyed a rising profile at the expense of nuclear power development. But there’s a certain class of nuclear power companies that could end up riding the storm of a nuclear crisis: those that also bet aggressively and made acquisitions in the clean power sector over the past couple of years, essentially diversifying their power portfolios.
Quite a few nuclear power developers took part in some of the larger mergers and acquisitions in the renewable energy sector last year, and their M&A appetite should only increase, according to a PricewaterhouseCoopers (PwC) report on the global M&A market released Monday. French nuclear engineering giant, Areva, entered the solar market by buying solar thermal energy developer, Ausra, for a reported $200 million. Chicago-based Exelon, the largest nuclear power plant operator in the U.S., bought John Deere Renewables in a $900 million deal to get into the wind energy business. The John Deere purchase ranked No. 2 in PwC’s top 10 M&A deals for 2010. The No. 1 was the Royal Dutch Shell’s $1.6 billion acquisition of Cosan in Brazil.
“The interplay between the nuclear and renewable sectors came into particular focus in 2010 as nuclear companies saw the opportunity to develop their carbon-free offering,” said the PwC report, which added, “The nuclear emergency in Japan, which is just unfolding as we go to print, could prompt further diversification by nuclear companies into renewables.”
How Japan’s nuclear crisis will affect the U.S. nuclear power development is still unclear. The Nuclear Regulatory Commission (NRC) said it will review all existing nuclear power plants and those under construction using lessons learned from Japan. NRC officials are scheduled to testify in a series of Senate and House hearings this week about Japan and its plan to review the 104 nuclear power plants in the U.S.
Energy Secretary Steve Chu already expressed his continual support for nuclear, which isn’t favored by some clean energy advocates who rather see more government support for solar, wind and geothermal. Over the past two years, President Obama and Chu have been amassing one of the most aggressive government plans to support nuclear power in the U.S. in decades. Last year, the DOE announced $8.3 billion in loan guarantees to Southern Company to build two nuclear plants in Burke County, Ga., which will be the first nuclear plants in the U.S. in almost three decades.
New Jersey-based NRG Energy, which mostly owns natural gas and coal-fired power plants, was planning to expand its nuclear power plant in Texas. NRG Energy’s CEO, David Crane, told us that the plan has a lot of uncertainties as investor and partner Tokyo Electric Power Co. struggles to deal with its crippled nuclear reactors. NRG, meanwhile, has been on a shopping spree for solar power plant projects in the past two years, including those being developed by First Solar, SunPower and BrightSource Energy.
The PwC report also highlights the big growth in the energy efficiency sector, which includes smart grids. M&A deals added up to $3.8 billion, or 11.4 percent of the total for 2010, up from $2.3 billion or 5 percent of the overall deal values. North America saw the most energy efficiency deals by attracting $2.5 billion’s worth of M&A deals, or 65 percent of the total in this category. The largest deal award went to New York-based ABM Industries, which bought energy management service company, The Linc Group in California, for $300 million, the PwC said.
The M&A activities in smart grid, in particular, continues to pop up, and we’ve tallied at least seven new deals so far this year. Those buyers are among the well known players in the space, including General Electric, IBM, EnerNOC and Johnson Controls.
Overall, the number of M&A deals in renewable energy rose 66 percent from 319 in 2009 to 530 in 2010, the PwC report said. The values of those deals, collectively, fell from $48.8 billion to $33.4 billion, however. The report said the decline was largely a result of two mega European deals in 2009 such as Enel Green Power’s purchase of Endesa.
Photo courtesy of Jason Hickey via Flickr