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Wind Energy Venture-Capital Funding Up 33% In 2011; Offshore Sector Gaining Ground

Published at: Jan 13, 2012
source: North American Wind Power

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Venture Capital is up 33% this year in the wind power industry, which shows investors' faith in this technology to return profits over the long term. The amount of private investment capital in the renewable energy industry is a bellwether for the general health and future of renewables, as it has historically been a heavily subsidized industry.

Global venture-capital (VC) funding for wind energy totaled $369 million in 14 deals in 2011 - up from $277 million in 11 deals in 2010 and $189 million in 20 deals in 2009, according to a new report released by Mercom Capital Group.

Wind power start-up ReNew Wind Power's $202 million raise was the top VC funding deal. Boulder Wind Power and Wind Energy Direct came in second and third, with $35 million and $29 million raised, respectively.

Project-specific funding also was higher than in previous years, reaching nearly $11 billion - $1.6 billion more than in 2010. Offshore wind projects represented $3.4 billion in five deals, and onshore wind raised $7.5 billion in 46 deals.

The top project in 2011 was the 400 MW Global Tech I offshore wind project in Germany, which raised $1.5 billion. Other top project deals were WindMW’s 288 MW Meerwind wind farm, which raised $1.2 billion, and the 272 MW Canadian wind farm being developed by Boralex, Gaz Metro and Valener’s Selgneurie de Beaupre, which raised $713 million.

The U.S. saw the most VC funding deals in terms of companies ($294.7 million in nine deals) and projects ($2.9 billion in 19 deals). Germany was a close second in investment, with $2.8 billion in large-scale project funding, followed by Canada, with $1.1 billion.

The most active project investor was the European Investment Bank, which was involved in eight transactions. The International Finance Corp. had seven transactions, and four other investors had four transactions each.

Debt funding was dominated by China, which accounted for $6.8 billion of the $11 billion announced in 2011. Denmark and Spain announced $1.9 billion and $1.7 billion in debt, respectively. The U.S. was fifth overall, with $201 million. The single largest deal was the $5 billion credit facility issued to Guandong Ming Yang Wind Power Industry Group Co. by the China Development Bank.

Mergers and acquisitions (M&A) activity amounted to $1.7 billion in 17 deals, the largest of which was the $724 million acquisition of wind gear maker Hansen Transmissions, a subsidiary of Suzlon, by ZF Friedrichshafen. The $596 million acquisition of Brazilian wind power operator Jantus by CPFL Energia was the second-largest deal of 2011. Wind component companies accounted for  $1 billion, and wind downstream companies accounted for $700 million in M&A activity in 2011.

There was also significant wind project M&A activity, with $4 billion transacted in 61 deals. Top deals were the acquisition of 50% of DONG Energy’s Anholt offshore wind farm by a consortium of Pension Danmark and PKA for $1.1 billion, and the acquisition of 11 wind farms from Auxiliar de Construccion y Servicios by Bridgepoint for $850 million.

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