U.S. Renewable Energy M&A: Review of 2022 and Outlook for 2023

Established renewable technologies represented the highest proportion of 2022 M&A activity with demand for renewable development platforms remaining strong. The pursuit of financial returns and the opportunity to quickly scale continued to drive investments in platforms plays. Notable transactions included Macquarie Green Investment Group’s acquisition of Treaty Oak4and Blackrock’s acquisition of Jupiter Power. Additionally, renewable investors not only continued to move up the value chain in search of financial returns but also diversified5 into emerging subsectors, such as Renewable Natural Gas (“RNG”), alternative fuels and standalone storage. Notably, RNG transaction volume more than doubled in 2022, with transactions such as BP acquiring Archaea Energy for $4.1 billion leading the charge.

As we move through 2023, we expect deal flow to remain strong as developers look to monetize opportunities and benefits driven by the IRA. Creative solutions and investor flexibility will be required as persistent supply-chain issues, long interconnection queues and high inflation remain. Furthermore, the rising interest rate environment will likely cause downward pricing pressure on 2023 asset sales. To address these challenges, we expect renewable energy investors to seek deals at the right price and move towards emerging technologies and subsectors to achieve an acceptable risk-adjusted rate of return. Furthermore, corporates may more closely examine the divestiture of non-core assets as a path to free up cash flow for strategic acquisitions or other operational drivers.