Alternative thinking 2011: A look at 10 of the top issues and trends in renewable energy
Merger & acquisition activity surges but funding remains tight
Government scrutiny increases as stimulus winds down
World-class scale and new skill sets are critical success factors
New York, 16 September, 2010 – The Deloitte Global Energy & Resources group released today “Alternative Thinking 2011: Top 10 Trends and Issues in Renewable Energy” at the World Energy Congress in Montreal. The report identifies key forces impacting the growth of the renewable energy sector today and over the next twelve months, chief among them the increasing complexities of access to capital, tax and government regulation, and the imperative for renewable energy leaders to effectively manage large-scale operations and attract right-skilled workers.
Rebounding from two years of dampened investments, renewable energy is enjoying robust merger and acquisition activity and an improving initial public offering (IPO) market, in part due to government stimulus. Yet, the lending market remains tough and uncertain as borrowers face increasingly expensive and onerous terms and governments under pressure consider limiting crucial incentives.
“Renewable energy is at a pivotal moment in time as an industry. It must access funding in order to grow, but to do that it must also offer more than proven technology. Companies will need integrated organizations, broader capabilities, and more developed supply chain resources to roll out programs on a significantly larger scale,” said Roman Webber, Deloitte Renewable Energy Community of Practice Leader.
The report identifies new funding sources such as companies in South Korea or sovereign wealth funds from Asia and the Middle East. It also signals a major shift in investor preferences, e.g.,solar energy has asserted primacy over wind for investors.
In another indication of increased expectations for renewable energy companies, the report noted that board members will be required to keep watch on a company’s reputational goals of sustainability and net energy efficiency.
Further, joint ventures are becoming a more common way for companies to achieve scale. Companies can “supersize renewable energy” by pooling resources to create a consortium that can enter new markets and spread risk. Renewable energy companies can also look to rivals for resources, including the traditional oil and gas sector, for complimentary expertise to help them plug skills gaps.
“Looking ahead, many oil and gas supply chain companies will begin to think of themselves as energy supply companies. On the flip side, investors seeking new opportunities should look at the supply chain, which has to develop significantly to meet the needs of renewable energy companies,” Webber said.
The report outlines where and how renewable energy companies can grow, the skills and characteristics that its managers will need to drive that growth, and emerging investment opportunities. Among the findings:
Impact of regulatory scrutiny:
The bigger costs of sustainability:
Where the jobs are:
This report is part of a series released by Deloitte that covers oil and gas, power and utilities and mining, and the renewable energy sectors. It draws upon in-depth interviews with renewable energy companies, industry analysts, and senior energy practitioners from Deloitte member firms from around the globe.
Deloitte as used in this release means Deloitte Touche Tohmatsu Limited.
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