Week in smart metering - Power and utility M&As

Power and utility deals in 2016 are outpacing previous years, writes Amy Ryan, deputy editor, Metering & Smart Energy International.
Published: Wed 17 Aug 2016

The number of power and utilities deals in 2016 are outpacing the previous three full years, according to an analysis performed by consulting firm, PWC.

An earlier report released by the firm, PwC Deals: North American Power & Utilities Deal Insights, notes that deals which took place in the second quarter of the year, were “driven by large corporate deals for electric utility, renewable and independent power producers, among others.”

Reports suggest that a four ‘mega deals’ fetched more than $1 billion each in 2016’s second quarter.

Apart from the news that Great Plains Energy will acquire Westar Energy in a $12.2 billion and Tesla’s $6.6 billion bid for SolarCity, other billion dollar deals include Riverstone Holdings’ $5.09 billion offer for a 65% stake in Talen Energy Corporation, and GIC’s pursuit to gain a 19.9% share in ITC Holdings from Fortis for $1.23 billion.

Bloomberg has rightly deduced that “it's merger time in utility-land,” and attributes the rise in M&A activity to a stagnant electricity market and increase in distributed energy which has “given big US utilities a tremendous appetite for M&A.”

Just this week, Metering.com reported on several acquisitions including Aclara’s acquisition of Tollgrade’s smart grid business. US water technology provider Xylem is also reportedly nearing a deal to purchase Sensus for $1.7 billion and the State Grid of China is looking to acquire Brazilian electric company CPFL Energia SA, a deal which could be China’s largest investment in the country.

Commenting on the high occurrence of acquisitions in the market, Joseph Fontana, EY Global Utilities Leader, Transaction Advisory Services, said: “Lower margins and lower demand for electricity, partly due to advancements in energy efficiency, have been driving consolidations.

"Since these dynamics are not changing, the M&A boom will continue into the second half of 2016, but likely not at the same pace as we’ve seen. We are running at four to five megadeals every six months, which is historically very high.”

More from Metering & Smart Energy International

Pacific Gas and Electric Company is partnering with several companies to test solar technologies to advance integration of distributed energy resources. [PG&E embarks on distributed energy demonstration].The Californian utility is teaming up with Enphase Energy to install and test smart inverters, Solar City to test smart inverters and battery storage systems for private solar customers. PG&E is also partnering with GE to demonstrate a distributed energy resource management system.

US power utilities New York State Electric & Gas (NYSEG) and Rochester Gas and Electric (RG&E) signed a deal with energy efficiency firm Franklin Energy Services. The deal includes the Port Washington-based Franklin Energy Services implementing and managing energy efficiency programmes for the two AvanGrid owned utilities. [US utilities partner in energy efficiency deal]. The projects will focus on helping residential, commercial and industrial customers to implement sustainable energy usage behaviours, save energy and money.

Spanish multinational electric utility company Iberdrola secured funding from the European Investment Bank to implement innovation projects to enhance its grid network. The €200 million ($223.1 million) loan secured by the utility will be used to enhance the firm's smart grid and renewable energy networks. [Spanish utility secures EIB funding for grid innovation]. In a press statement, Iberdrola said it will invest the money to enhance its grids in the UK and Spain.

In India, energy firm India Power has begun to install smart electric meters in the city of Gaya in Bihar state. The deployment of the smart meters is expected to help the utility company to lower power theft, ensure accurate electricity billing and revenue collection. [Indian utility kickstarts AMI project to enhance billing]. In addition, the smart meters will help India Power to ensure grid reliability through the provision of real time insights of the grid status.

Michigan utility Consumers Energy is planning to install more than 800 charging stations as part of a $15m statewide electric vehicle infrastructure programme. According to Midwest Energy News, should Consumers Energy’s electric vehicle programme go ahead, it could make the utility a leader in the EV market in the Midwest. [Consumers Energy plans to install 800 EV charging stations]. The proposed programme forms part of a broader rate increase request under consideration by the Michigan Public Service Commission.