Plug In: Energy Sector Updates

Sustainability + Energy Transition + CleanTech M&A

Coming in Hot to 2021: Sustainability/CleanTech Investments/M&A in 2020

2020 proved to be a banner year for the thematic clean-energy and broader CleanTech industries. Indexes soared to new highs with a continued positive outlook, M&A was robust with attractive multiples driven by insatiable investor appetite.

Three key factors drove 2020’s deal activity:

  • Improving economics (solar and wind power are now among the most cost-competitive sources of new electricity capacity additions in the U.S. and abroad)
  • Record-breaking growth of multiple clean-energy sectors during the global COVID-19 pandemic (shining a light on the resilience of wind and solar markets, in particular)
  • The expansion of green stimulus plans across Europe, Asia, and the U.S.

Sector Spotlight: Energy Storage

The pandemic brought the broader economy to a halt, but the energy storage industry clearly didn’t get the memo. Instead, developers made 2020 the biggest ever for battery installations in the U.S.

More capacity is going into homes than ever before, helping families make better use of rooftop solar investments and keeping the lights on during outages. Large-scale projects reached new heights with utilities across the country using batteries to solve numerous grid problems and planning far more into the near future.

Solar and wind development projects with collocated storage are also providing a compelling opportunity. Project backlog is at an all-time high, with gigawatts of storage coming online.

Looking Forward: Carbon Sequestration

Carbon capture and storage (CCS) is widely seen as a critical technology for reducing atmospheric emissions of carbon dioxide (CO2) from power plants and other large industrial facilities—major sources of greenhouse gas emissions linked to global climate change.

Global capacity for CCS is on track to total 116 Mtpa by the end of 2020, according to the report. This is a 33% year-on-year increase, and a 100%+ increase on 2017 levels [3]. Various market players are joining forces to complete large-scale CCS facilities and rapidly commercialize the technology.

Encouraging signals and financial backing by governments worldwide are expediting industry pace as novel and compelling technologies continue to emerge to meet growing calls for change. We see a lot of interesting dynamics evolving in the commercial and industrial categories, as well as in the large-scale end of the market.

Sector Spotlight: Industrial Internet of Things (IIoT)

Overall, IoT dealmaking remained strong in 2020, driven by a flurry of consolidation in the healthcare, transportation, manufacturing, and wireless sectors. The total value of IoT acquisitions rose to nearly $69bn from $8bn in 2019 [4].

M&A activity was concentrated in a handful of verticals as businesses sought to digitize. Spurred by the global health crisis, healthcare technology-related transactions led in volume, with 24 acquisitions totaling over $19bn, or 20% of all deals last year. Investors showed sustained enthusiasm for the transportation sector, with 13 transactions in commercial and consumer transportation totaling over $5.8bn [4].

Enterprises continue to face a variety of complex challenges. Digital technologies—like industry 4.0 and the industrial internet of things (IIoT)—offer huge potential in enabling the fast implementation of many novel, value-adding use cases. Early adopters of the technology have an advantage in effectively navigating turbulent waters.

A Closer Look: Supply Chain Management & IoT

Before the COVID-19 pandemic, many companies implemented a lean supply chain, which prioritized cost reduction and minimized global product inventory. The pandemic exposed vulnerabilities in the lean supply chain approach, forcing companies to increase local inventory levels and diversify their suppliers. Firms utilized IoT solutions to control supply chain events across various modes of transportation and multiple logistics hubs.


[1] Pitchbook
[2] IHS Markit
[3] Global CCS Institute
[4] 451 Research

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