Wind deals soared with potential PTC expiration
An increase in generation asset and renewable transactions drove another strong quarter in the power and utilities industry, according to PwC.
Deal volume more than doubled in the fourth quarter of 2012 compared to the same timeframe in 2011 with more than 13 deals greater than $50 million, 40 percent of which can be accredited to alternate energy sources transactions. Wind transactions accounted for nearly 60 percent of alternative deals in the fourth quarter of 2012. This is a significant increase from the third quarter of 2012 when alternative energy source transactions only contributed to seven percent of deals.
"With continued low natural gas prices and lingering uncertainty around load recovery, environmental regulations and tax policies and incentives, we saw an uptick in generation asset and renewable transactions through the end of 2012," said Jeremy Fago, PwC's U.S. power and utilities transaction services leader.
He added that, "Additionally, we saw an increase in wind deal activity as expiration of the Production Tax Credit (PTC) approached at the end of December. Looking at the deal landscape throughout the year, we anticipate more merchant divestiture activity as companies look to rebalance around core regulated businesses."