• Nicole

Private Equity Investment Themes for 2017

Updated: Jul 10, 2019

Investments in renewable energy in 2016 reached a record and amounted to 329 billion dollars, despite the drop in oil prices. We certainly saw a real increase in appetite and activity for mergers & acquisitions for digital firms. In comparison with the year 2015, capital expenditures in the "green" energy rose by 4 percent. The investment growth reflects the increase in the price of the competitive advantages of the wind and solar energy and this is reflected in business plans of these firms.

Among the countries, the biggest players in the market, most investments in China increased. It grew by 17 percent to 110.5 billion dollars. Approximately half the size of companies involved in "green" energy, brought to the United States ($ 56 billion).

In December 2015 the summit in Paris approved a new UN framework agreement defining the GHG emission standards from 2020 and measures to prevent climate change. Reducing emissions affecting the heating of the Earth surface, it is planned to carry out, including through the development of renewable sources.

Recent economic developments in the energy sector made sure that the first electricity from renewable energy sources has become competitive. Therefore, 2017 will be a turning point for the business of electricity production from renewable sources.

Solar electricity production, for example, is becoming more cost-effective, and cheaper electricity itself. The fact that investment in solar energy is a viable alternative, as all recognize the power companies.

Once the market for electricity from renewable sources asleep for a long time, but now it woke up. In order not to wake, power companies are forced to develop new concepts rapidly and to enter into a strategic partnership with the experts in solar energy.

Renewable energy economy in comparison with hydrocarbon energy is characterized by short periods of design and construction, low (and declining) unit variable and capital costs and the cost of a kilowatt-hour. Also, the use of renewable energy sources largely removes the risks of long-term contracts for the supply of electricity - solar and wind power, "do not ask," the cost of electricity is independent of jumps in the fuel market. Therefore, we see that the current dramatic decline in prices for fossil raw materials does not slow down the expansion of renewable energy.

The current experience of the spread of renewable energy is not only interesting from the transformation of energy, but also regarding understanding the approaches to industrial and technological development. In today's world, developed countries Overstocked systematically create new growth points. They extend the economic field, provide a wealth of growth and employment. Despite the boom in oil and gas production in the US, only in solar energy more jobs were created in 2015 than in the entire oil and gas industry, including pipeline sector. Renewable energy technologies have become a major article of export of goods and services. Chinese business is building a wind power plant in Mexico, the US - the sun in India.

Last year was a record year for renewable energy investments both regarding volume and regarding capacity built in the wind (64 GW) and solar energy (57 GW), according to Bloomberg New Energy Finance. At the end of 2016, the total installed capacity of wind power has surpassed nuclear power in the world. The EU and the US wind power ranked first by volume of installed capacity among all types of generation. Renewable energy provided 32.5% of the electricity consumption in Germany (against 27.3% in 2015). In Denmark, wind energy covered 42% of consumption (in 2015 - 39.1%).

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