Mergers and acquisitions in renewable energy projects in Ireland, and particularly in onshore wind, have been increasing steadily in recent times and this is expected to continue over the coming years.
This evidences recovery in the Irish economy and is consistent with the global trends in the sector. At a recent annual conference of the Irish Wind Energy Association (IWEA), it was stated that the onshore wind sector in Ireland would generate new investment totalling as much as €4.7 billion by 2020. The new investment will, among other things, come through wind energy companies signing contracts with Eirgrid and the ESB to connect to the national grid as part of the ‘Gate 3’ connection programmes.
There are a variety of factors contributing to and facilitating the current activity in onshore wind projects in Ireland, some of which are set out below.
There is a considerable amount of capital available at present in Ireland for investment. This is coming from private investors, pension funds, renewable energy and cleantech funds, etc. Due to economic considerations and forces in the market, renewable energy projects are currently seen as very attractive due to cheaper costs and the potential for significant returns. Investment criteria and motivations will vary depending on the particular investor. Some will be long term investors while others will seek a short term return. Other investments will be tax driven. Such considerations can have considerable impact on the structure and strategy of a development and it is vital to get structures right from the outset.
Ireland, due to climatic and geographical considerations, offers a top quality wind resource, but there is still a considerable shortage of wind projects under construction to meet the growing investor demand. With such a quality resource available, combined with a strong hunger for investment opportunities from investors, it appears to be a lucrative time for developers to consider new projects. Investors also appear to be eager and willing to enter the development process much earlier in an effort to shape projects to meet their particular needs.
Ireland offers strong Government commitment to the renewable energy sector and offers a safe investment environment for potential investors. Ireland currently offers significant state aid subsidies such as REFIT (Renewable Energy Feed in Tariff) in an attempt to ensure that Ireland complies with its obligations under EU renewable energy targets. The Irish Government faces penalties of as much as €350 million if the country fails to meet its renewable energy targets by 2020. With the EU having recently set even more onerous renewable energy targets for the period 2020-2030 (albeit non-binding), the growth of renewable energy, and more specifically onshore wind projects, is likely to continue. Added to this, there are clear planning regimes in place and a stable regulatory environment to support the industry.
Onshore wind activity in Ireland is without doubt gathering speed. With a good investor base, strong Government incentives, and banks appearing more willing to provide finance to well-structured projects, the coming years appear to be very bright for the renewable energy sector in Ireland.
Having considerable expertise in windfarm development, private equity transactions, mergers and acquisitions, property and project finance, we believe LK Shields is well placed to provide comprehensive advice on any queries our clients may have in this growing area.
For further information, please contact Philip Daly, Head of our Energy and Natural Resources Team at firstname.lastname@example.org.