Thursday, August 18, 2011

Wind farm valuations declined in 2010 as developers sought to sell assets
The year 2010 saw a record number of acquisition deals for wind assets worldwide, although the total capacity of wind assets changing hands was less than half that of 2008. The average price for operating plants fell, while those for permitted pre-construction projects rose, according to the latest Portfolio Hunters report published by Bloomberg New Energy Finance.

The report is based on analysis of the world's most robust data set of 875 sale and purchase transactions of wind assets from early-stage developments to operating wind farms. It found that some 26.8GW of wind assets were sold  in 2010, up 15% from 2009's levels but down more than half on 2008's figure of 53.9GW. However, a record 163 deals closed in 2010, up nearly 60% from  2009 figures.

During the period from 2001 to 2011, there were 309 deals with disclosed pricing and portfolio information,  and these were used to derive pricing benchmarks by stage of development and by geographic market. The main  findings of the report include:
• The global average price for operating wind farms sold in 2010 fell 5%  to EUR 1.58m per MW. Prices peaked at EUR 1.78 per MW back in 2008.
• This fall reflected the pressure on some project developers to sell  completed wind farms in order to strengthen their balance sheets and secure  cash to fund their current development portfolio.
• Some utilities have also been selling wind assets to rebalance their portfolios, mainly in Iberian markets and the offshore sector.
• New, well capitalised buyers have entered the market, attracted by the lower prices. These included pension funds, asset managers and private equity funds, insurance companies, technology and consumer brands, most of which target commissioned assets with no financing or construction risk.
• Buyers continued to pay a significant premium for management teams, although somewhat less than in earlier years. Average valuations for wind  development companies were EUR 1.88m/MW while average pricing for  acquisitions of projects only came in at EUR 1.48m/MW - some 22% lower.
• Fully-permitted, but unbuilt, assets saw a 25% jump in average pricing to EUR 172,000 per MW, reflecting fierce competition to secure good wind sites - especially in Europe - and a recovery from distressed prices in 2008-09.
• Bloomberg New Energy Finance expects to see a further, slight reduction of pricing for commissioned assets (to EUR 1.5m/MW) in 2011 as policy uncertainty and asset divestments continue - providing opportunities for asset buyers.

Michael Liebreich, chief executive of Bloomberg New Energy Finance, commented: "In the wind market, we are seeing the emergence of a new normality after the depressed acquisition activity levels of the post-financial crisis period. As always, asset owners with the lowest cost of capital are the net buyers. What is different from before the crisis is that in many cases these are now long-term financial owners, rather than utilities."

Bloomberg New Energy Finance
Press Release dated July 12, 2011

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