Vinson & Elkins report assesses a decade of private market investment trends in renewable energy

AUSTIN, TX, December 10, 2021 /PRNewswire/ — According to a new report from Vinson & Elkins, Power Play: How Private Capital Shapes Energy Evolutionmultiple factors combine to create a dynamic trading environment amid accelerating technology innovation and changing investor attitudes as the energy ecosystem evolves.

The report draws on data from PitchBook and analyzes private equity and venture capital investments since 2010 to show the changing financial landscape in energy and infrastructure, and how the increased focus on sources renewable and clean energy sources is impacting the industry. Key takeaways from the report include:

  • Due to the widespread and drastic shift in investor demand, there has been a substantial shift in private equity transactions towards less carbon-intensive or low-carbon energy sources and, more recently, towards technologies designed to capture carbon. From 2010 to 2020, PE fundraising for renewable energy reached $90 billion invested in space.
  • Investors face pressure on profit margins and returns due to a highly competitive market with significant competition for transactions and greater availability of capital at lower costs. Both of these factors will influence private equity investments, especially in the overheated renewable and sustainable energy markets.
  • Venture capital investments in clean energy have already set a record in 2021, reaching a total value of $24.1 billion. With 957 financings completed worldwide, this year should also see a record volume. These investments have enabled and accelerated the scaling of technological advancements, resulting in increased potential for exit strategies as well as public market introductions and combinations of SPACs (What is driving the Transition Energy IPOs and SPAC combinations?).
  • Increased consolidation in the traditional energy sector is expected to continue as major companies merge with each other in hopes of realizing synergies, consolidating market positions and creating scale.
  • Even if pressure from investors and the public to decarbonize intensifies, new players in the traditional energy sector could be brought in to provide capital for the continuation of production, essential to the energy transition already underway.

“We work with the world’s largest and oldest energy investors, and have witnessed how our clients’ investment strategies have been reshaped due to structural changes in attitudes. public and private regarding energy sources, decarbonization and environmental degradation.The last decade in particular has seen a rapid increase in investment in renewable and sustainable energy, in general, as well as in technologies to As the transition to a less carbon-intensive energy economy accelerates, the impact of intense competition from investors, private sources of capital, emerging businesses and venture capital will intensify and will play one of the most important roles in building our energy future,” Kaam Sahely, Head of Renewable Energy Practices Sustainable Development and Infrastructure, Vinson & Elkins.

“We are at a time when investments in renewable energy are happening at such a pace and on a scale that they are impacting not just the energy industry, but almost every economic sector, business at all levels of the economy fueling demand for Traditional sources of capital continue to be freely available for mature renewables, such as solar, wind and, increasingly, battery storage, but we we also see the willingness of capital providers to structure products in other more nascent technologies that are viewed with optimism, such as green hydrogen and carbon capture and storage strategies,” Eamon Nolanproject development and funding partner, Vinson & Elkins.

“The pace and volume of venture capital flowing into the energy transition provides private cleantech companies with a longer time frame to develop the technology and a greater ability to achieve commercialization. These new energy-related technologies are critical to decarbonization, and it’s an exciting time for our practice as we leverage our longstanding capabilities in the energy sector to guide clients funding these initiatives. », Milam NewbyHead of Technology Practice, Vinson & Elkins.

For more information and to view the full report, visit: https://www.velaw.com/insights/how-private-capital-is-shaping-the-energy-evolution/

Vinson & Elkins has been supporting its clients in the evolution of renewable and sustainable energies since its inception. The firm’s multidisciplinary team regularly advises a wide range of clients ranging from start-ups to Fortune 500 companies to venture capital and private equity sponsors on acquisition, divestment, financing (including tax equity financings), development, tax, regulatory, litigation, environment, real estate, labor, national security and intellectual property issues related to clean and renewable energy assets and projects. The firm also has extensive experience advising clients on complex alternative and sustainable energy projects, including solar, wind, hydro, energy storage, renewable fuels, hydrogen, carbon capture and sequestration, fuel cells, electric vehicles, geothermal energy, smart grid applications, biofuels, biomass, waste-to-energy and other advanced technologies.

About Vinson & Elkins
For more than 100 years, Vinson & Elkins has provided deep experience in handling transactions, investments, projects and litigation around the world. The firm is a trusted advisor to clients in the most important industrial and digital industries. Learn more by visiting www.velaw.com and follow us on Twitter @VinsonandElkins or connect with us on LinkedIn.

For more information, please contact our media contacts.

SOURCE Vinson & Elkins LLP