Industry Trends
More Oil and Gas Companies Leaning into Renewable Energy Tech
New research published by DNV GL finds that the oil and gas industry expects to boost investment in future energy systems this year, based on a survey of more than 1,000 senior oil and gas professionals and in-depth interviews with industry executives. As companies seek to transform for the long term, a record two-thirds of senior oil and gas executives report that their organizations are actively adapting to a less carbon-intensive energy mix in 2021. This represents an increase from 44% in 2018. 57% of companies in the oil and gas industry plan to increase investment in renewables, up from 44% in 2019, and about half expect to increase investment in green or decarbonized gas.1
Power Sector Faces Continued Financial Distress in 2021
The pandemic has created challenges for independent power generation companies as well as utility companies. For the power companies, this means many of their customers may struggle to pay or will be looking for a discount. More prominent players such as Duke Energy and American Electric Power (AEP) did not report any liquidity issues or substantive delays in their most capital-intensive projects. Still, future uncertainty in the market remains one of the most significant threats to the industry.2
NRG Completes $3.6B Acquisition of Direct Energy
Independent power company NRG Energy has completed its $3.6 billion acquisition of retail electricity distribution firm Direct Energy. With this acquisition, NRG adds more than three million retail customers across North America. NRG now features a larger customer footprint, serving all fifty U.S. states and parts of Canada. The expansion adds much-needed regional diversity to NRG’s portfolio, as more than 75% of Direct Energy’s customers are outside of NRG’s primary demographic in Texas.3
Solar Industry Adds Record Capacity in 2020 Despite Pandemic
The U.S. solar industry installed a record 19.2 gigawatts of photovoltaic (PV) capacity in 2020, a 43% increase from 2019, according to a report released by the Solar Energy Industries Association (SEIA) and Wood Mackenzie. The increased demand in the second half of the year and supportive government policies helped offset the negative impacts of the pandemic in the first half of the year. Solar accounted for 43% of all electricity-generating capacity added in the U.S. in 2020, representing solar power’s largest-ever share of new generating capacity and ranking first among all power generation technologies for the second year in a row.4
Biofuels Producer New Leaf Expands Facility
New Leaf, a leading provider of low carbon biodiesel to the California market, opened its newly expanded facility in Barrio Logan. The facility will more than double the producer's biofuel output, from 5 million gallons to 12 million gallons annually. Biofuel results in 80% less carbon emissions than petroleum diesel. New Leaf has produced over 30 million gallons of biofuel and has enjoyed one of the lowest carbon intensity scores in the market.5
Infrastructure Importance for Electric Vehicles and Fleets
According to Bloomberg, electric vehicle (EV) sales are poised to rebound faster than traditional automobiles after the Covid-19 slump. Lyft has joined fellow EV adopters Amazon and UPS with an ambitious plan to convert its entire fleet to EVs. However, there is an insufficient number of level-two chargers, which are the backbone of the EV infrastructure. Retail and hospitality companies and municipalities are now facing the task of upgrading their electrical infrastructure to support EV charging to attract potential customers.6
Short Term Energy Outlook
EIA forecasts that electricity consumption in the U.S. will increase by 2.1% in 2021 after it fell 3.8% in 2020. Residential sector retail electricity sales will grow by 2.7% in 2021. This increase is primarily a result of colder temperatures in the first quarter of 2021 compared with the same period in 2020. Despite rolling power outages in Texas and other states during February, estimated U.S. residential consumption during the first quarter of 2021 is 10% higher than at the same time in 2020.7
Largest Transactions Closed
- Target
- Buyer
- Value($mm)
- TC PipeLines, LP
- TC Energy Corporation
- $3,938.23
- Centrica Us Holdings Inc. and Direct Energy Marketing Limited
- NRG Energy, Inc.
- $3,625.00
- Trippe Manufacturing Company
- Eaton Corporation plc
- $1,650.00
- WGP Holdings II, LLC
- ContourGlobal plc
- $837.00
- Competitive Power Ventures Power Business
- Poalim Ventures Ltd., Migdal Insurance and Financial Holdings Ltd., Clal Insurance Enterprises Holdings Ltd., and OPC Energy Ltd.
- $743.00
- GridLiance Holdco, LP
- NextEra Energy Transmission, LLC
- $660.00
- Weir Oil & Gas, Inc.
- Caterpillar Inc.
- $405.00
- Pine Run Midstream, LLC
- Pine Run Gathering LLC
- $205.00
- Solar and Storage Projects
- SDCL Energy Efficiency Income Trust Plc, Sustainable Development Capital LLP, and Asset Management Arm
- $150.00
- Crude Oil Terminals of Blueknight Energy Partners
- Enbridge Inc.
- $132.00
Source S&P Capital IQ as of 4/12/2021 and PCE Proprietary Data
Contacts
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Data Assumptions This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only. Glossary EBIT - Earnings Before Interest and Taxes Sources:
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