Polish renewables M&A market experiences return of foreign investors – EY (interview)
There is a return of interest in the Polish renewable energy market from foreign investors, partner at accountancy firm EY Polska Sebastian Jasinowski told PAP Biznes. He added that investor activity this year will depend on interest rates and energy prices.
"One of the main factors determining the outcome in 2025 will be potential interest rate cuts, although the market is not clear in its predictions for their scale and pace," said Sebastian Jasinowski, EY Polska partner in the Mergers and Acquisitions team, leader of the M&A Energy team in EY.
"The M&A market in renewables will also be influenced by energy prices. Although we have already passed the period of normalization of long-term price paths and the perspective is more stable. Of course, excluding seasonal and daily variability, which is constantly growing due to the increased share of renewables in the mix," he added.
Jasinowski said that EY expects greater involvement and return to the market of significant foreign investors who haven’t been very active since mid-2022.
"We’re observing increasing interest from these entities and a return to transaction processes on the Polish market," he added.
As he noted, private equity funds are very active in the renewable energy market, from funds dedicated to green transformation, through infrastructure funds, to funds investing specifically in the broader energy sector.
According to Jasinowski this activity has increased in recent years. In his view, 2024 was another year of stabilization on the M&A market in the renewable energy sector after 2023, with around 20-30 larger transactions worth from several dozen to several hundred million euros.
"Against the background of last year's declines in M&A in Poland, this market performed relatively well," said the EY partner.
As he pointed out, the stabilization is, on the one hand, the effect of still relatively high interest rates and normalizing paths for energy prices, but on the other hand, the ongoing process of shaping the transformation strategy in the largest energy companies and in the industrial sector.
He added that, long-term infrastructure investments, including energy projects, are very sensitive to interest rate changes.
Jasinowski said that until mid-2024 there were seven consecutive quarters of declines in long-term energy price paths, and the last two quarters of 2024 were a sideways trend, essentially neutral for valuations.
The EY partner assessed that there is a deficit of onshore wind projects on the market.
"There is still a shortage of wind projects and there will be a shortage for the next few years," said the expert.
Jasinowski said that many developers specializing in wind projects switched to photovoltaics (PV) after the pause in the development of wind power investments due to the 10H Act from 2016.
"Today, we have only a few wind projects in the ready-to-build (RTB) phase, which are looking for investors," he added.
"Further, we will have a gap until projects released after the liberalization of regulations in 2023 go through the development process to the ready-to-build phase," he added.
He pointed out that the industry also expects further liberalization of the so-called Wind Farm Act in the near future, which would enable the construction of wind farms at a distance of no less than 500 meters from inhabited buildings.
According to Jasinowski, in PV there is a large number of industrial-scale projects in various stages of development, including ready-to-build.
"PV projects have been developing in Poland in the last few years at a record, unexpected pace. We already have over 20 GW of installed capacity (including small and micro installations on roofs and plots of single-family houses and companies)," said Jasinowski.
EY partner assessed that an important factor in investing in renewable energy, including PV assets, is also the level of necessary CAPEX.
In the expert's opinion, in Poland there is a need for stabilization of the supply side and flexibility of the demand side of the power system. This need can be largely satisfied by the development of energy storage facilities. He added that investors are increasingly involved in investing in energy storage facilities in Poland.
"We are dealing here with a first mover advantage, i.e. the first energy storage facilities that will 'stabilize' the system will achieve the highest revenues from arbitration and balancing services in the first years after launch, which in turn will significantly improve the rates of return on these investments," said Jasinowski.
He added that the portfolio of energy storage projects in Poland amounts to approx. 40-50 GW at various stages of development, and there is talk of 10-15 GW in the next decade, which is aimed to respond to the needs of the system. A dozen or so storage projects have already attracted investors, and many others are in transaction processes.
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