From BusinessWeek:
Acquisitions in the solar industry will accelerate as manufacturers and developers prepare for the expiration of a tax credit that’s helping drive an installation boom in the U.S.With renewable-energy executives gathering in Las Vegas for the Solar Power International conference that begins today, some will be shopping their companies around and others will be evaluating potential purchases, said Michael Horwitz, who leads energy technology investment banking at Robert W. Baird & Co. in San Francisco.
The federal investment tax credit, which reimburses 30 percent of development costs for solar projects, underpins the industry’s financing models. When that drops to 10 percent at the end of 2016, some companies will struggle to remain competitive. Horwitz expects a wave of consolidation that will result in about six to 12 large solar conglomerates that will be able to beat utility prices for power.
“We’re going to see a lot of M&A activity going into next year,” Horwitz said in an interview. “The growth in front of that ITC loss is going to be dramatic.”
U.S. solar development will almost double by 2016 to 9.6 gigawatts, up from about 5.1 gigawatts this year, according to Bloomberg New Energy Finance. After the ITC is reduced, the London-based research company expects new construction to drop to about 4 gigawatts in 2017 and take six years to recover.
NRG Deals
Some consolidation has already begun. NRG Energy Inc. (NRG:US), the largest independent U.S. power producer, purchased three solar companies this year, most recently a deal this month for the online marketer Pure Energies Inc. and an August deal for Goal Zero, a supplier of portable batteries and solar panels that charge laptops and smartphones....MORE
