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PowerDynamics
Figure3: AllElectricity&GasDealsbyValue,US$bn,2008
need to be supported more wholeheartedly by
governmentsandinvestors.Accordingtoleading
cleanenergyandcarbonmarketanalysts,New
EnergyFinance(NEF),theworldeconomiccrisis
has hit investment in clean energy meaning
growthinthesectorisnolongerontrackforthe
world to avert the worst impacts of climate
change. In Global Futures 2009 insights, NEF
analysts say that although lower economic
activitywillreduceCO
2
emissions,inthelonger-
term,thedrying-upoffundingforlowercarbon
Source: PricewaterhouseCoopers,Power Deals 2008AnnualReview
energy solutions is likely to have a far greater
adverseimpactonemissions. 2008comparedtoninesuchdealsin2006and2007.US$74bn
InvestmentincleanenergyincreasedfromUS$34bnin2004 droppedoutoftheannualtotalpowerdealvalueasaresultof
toaroundUS$150bnineachof2007and2008.Butthat’snot thewaningofUS$10bnplusdealsin2008.
enough. NEF’s latest report demonstrates that investment Therevivalofnuclearpowerisalsobeingreflectedinarace
needstoreachUS$500bnperannumby2020ifCO
2
emissions among the big players to position themselves globally to
from the world’s energy system are to peak before 2020. capitaliseonplannedexpansion,sayPwC.France’sEDFtook
Scientific experts fear that continued growth of emissions thespotlightin2008asitwentontheacquisitiontrailinthe
beyond2015,or2020atthelatest,wouldcreatethestrongest UK and the US for nearly US$30 bn of assets in deals with
risksofsevereandirreversibleclimatechange.NEFanalysis British Energy and for just under 50% of the nuclear
showsthatapeakmuchbefore2020currentlylookshighly generation portfolio of Constellation Energy. The nuclear
unlikely(seepage120). revivalalsospurredanumberofnon-M&A
Totalpowerdeal
joint venture deals between utility
PowerDeals,2008
2008wastheyearinwhichpowerdeal
valuewasdown41%
companies and nuclear technology and
constructioncompanies.
values came down from their record
toUS$220bnin2008
Gas deals continued to be notable for
breakinghighsofthetwoprecedingyears their relative absence as holders of gas
as the financial crisis took hold and a number of market assets sat tight on valuable reserves. Gas deals comprised
uncertainties had a negative impact on deal activity. 11.6%ofallpowerdealsandjust7%oftotalpowerdealvalue.
Nonetheless,totaldealnumbersleaptby24%ascompanies The tight hold companies are exerting on gas assets was
concentrated on smaller deals and took advantage of new illustrated by Origin Energy’s successful resistance to BG
opportunitiesthataroseunderchangedmarketconditions. Group’s US$13.3 bn takeover bid to secure Origin’s prized
According to Power Deals 2008 produced by Australiangasreserves.
PricewaterhouseCoopers(PwC),despitethecreditcrunch,the
numberofelectricityandgasdealssoaredtoarecord954in TotheFuture...
2008,upfrom768in2007,itselfarecord.However,values Investment to replace ageing plant and provide for the
plummeted.Totalpowerdealvaluewasdown41%toUS$220 sustainabledevelopmentofanewworldpowerinfrastructure
bnfromtherecordUS$372.5bnachievedin2007.Thefall isunderway,eventhoughsitingandpermittingremainkey
tookaggregatepowerdealvaluebacktojustabovethelevel challenges.Competitivemarketsandthegridintegrationof
seenin2007aheadoftheseriesofUS$40bnplusmegadeals renewableenergyneedmorerobust,flexibleand‘smart’power
thattookplacein2006and2007. grids, which cannot be achieved without a strong push for
Unlike the two preceding years, there was a complete more investment, coordinated regional planning, speedy
absenceofvertigo-inducingUS$40bnplusdealsastheimpact regulatoryprocessesandproperincentives.Weaddressthese
of the financial crisis took hold and the players who had andotherissuesinthepagesthatfollow.

figured prominently in earlier deals took time to digest
previousacquisitions.GasNatural’stable-toppingUS$35.8bn GuyIsherwoodisPublisherandEditorofWorldPower.
bidforUnionFenosawasoneofthreeUS$10bnplusdealsin www.commodities-now.com
worldPower2009 11
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