Renewables: The bright spot in APAC M&A

As governments and the private sector intensify their efforts to meet ambitious clean energy targets, companies are in a race to develop wind, solar, hydro, battery energy storage systems (BESS) and other sustainable energy projects across APAC. This robust environment led to over US$30 billion worth of renewables M&A transactions in the region in 2022 alone. The sector continued to be a bright spot in regional M&A last year, particularly in Southeast Asia, though deal volumes came off 2022 records.

Looking ahead, while there remain a few large regional platforms that may still come to the market this year, we believe the majority of deals in 2024 will likely be driven by smaller developers and country-specific portfolios as they seek financial backing or aim to sell operating assets to recycle them into future developments. Geographically, Australia and India should maintain robust deal flow this year, with opportunities also emerging in Japan, Korea, and Vietnam.

In terms of technology, utility-scale wind and solar projects still dominate, but deals in BESS and commercial and industrial (C&I) solar spaces are on the rise. As the sector matures and market liberalization spreads across various countries, BESS and C&I solar will continue to gain a greater share of total deal flow.

Longer-term, significant equity capital will also be raised for offshore wind projects, with countries like Taiwan, Japan, Korea, the Philippines and Australia promoting supportive policies and garnering increasing investor interest. Importantly, renewables-focused fundraising globally remains very strong, with $27.4bn raised in 2022, exceeding 2019 and 2020 combined.

Overall, the APAC renewables sector is set for continued robust growth, and it reflects huge potential for bringing transformative change to the region as the world collectively grapples with the challenges posed by climate change.