The renewable energy sector underwent remarkable growth in the United States throughout 2023, marked by a series of significant transactions that underscored the sector's growing share of the global energy landscape. Electricity generation from renewable energy sources has been growing steadily in the United States over the past decade. In 2022 for example, electric power generation from all types of renewables accounted for nearly one-quarter of total generation by the U.S. electric power sector¹.

 

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For example, wind and solar accounted for 14% of U.S. electricity generation in 2022, 16% of total generation in 2023 and is forecasted to reach 18% in 2024³. By comparison, electricity generation from coal falls from 20% in 2022 and to 17% in both 2023 and 2024. Natural gas accounted for 39% of electric power sector electricity generation last year, and its forecasted share is to be similar in 2023 then fall to 37% in 2024⁴. The EIA expects renewable deployment to grow by 17% to 42 gigawatts (“GW”) in 2024 and account for almost a quarter of electricity generation.⁵

It is predicted that solar and battery storage will make up 81% of the new U.S. electric-generating capacity in 2024 (see chart below).

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In the United States, twenty-nine jurisdictions, representing around half of United States electricity retail sales, have mandatory renewable portfolio standards (RPS); twenty-four jurisdictions have zero greenhouse gas (GHG) emissions or 100% renewable energy goals spanning 2030 through 2050.⁷ There are twenty-eight parent utilities serving 83% of US customer accounts with carbon reduction targets.⁸ Twenty-five utilities have committed further to either an 80% carbon reduction or an 80% share of clean generation by 2030.⁹ More states, localities, and public utilities are expected to invest in renewables in 2024, as direct pay and transferability mechanisms authorized by the Inflation Reduction Act (“IRA”) help enable more market participation.¹⁰

A. THEMES FROM THE 2023 TRANSACTIONS

In the following section, we have highlighted several themes emerging from renewables M&A activity in 2023.

1. Increased U.S. Mergers and Acquisition (M&A) Activity from Investors Outside the U.S.: The renewable energy sector witnessed significant M&A activity from foreign investors in 2023, with several high-value acquisitions by Hydro-Québec, Ørsted, APG, Brookfield and Repsol. The U.S. renewables sector has been and will continue to be in the near future an attractive investment target for foreign investors because of the number of available investments, the higher returns and lower risks relative to other markets, and the new transferability of tax credits under the IRA.
   
   
2. Increased Debt Activity by Investors Outside of the U.S.: Like M&A activity, there were also major debt issuances by foreign lenders in 2023. Traditional institutional investors, private equity firms, and global asset managers from outside the U.S. increased lending to renewable energy companies in the U.S. in 2023. These investments signify growing confidence in the sector’s longer term viability and profitability.
   
   
3. Expansion of Renewable Energy Portfolios: Many companies, both established players and newcomers, are expanding their renewable energy portfolios through acquisitions and strategic investments. This expansion reflects a broader commitment to clean energy and a desire to capitalize on the growing market demand for renewable power.
   
   
4. U.S. Activity Spurred by Government Support and Incentives: The Infrastructure Investment and Jobs Act (“IIJA”) and the IRA have enhanced renewables through historic investment in programs, grants, and tax credits to accelerate the deployment of established and emerging renewable technologies. This show of government support plays a significant role in facilitating large-scale renewable energy projects. There are transactions in the list below that are strong illustrations of government support of renewable technologies. For example, the Sunnova deal resulted in a $3 billion loan from the DOE while the IRG Transaction netted a $580 million production tax credit under the IRA.
   
   
5. Storage and Solar Are Booming: The IIJA and the IRA have had a profound impact on solar and storage. There is a notable emphasis on energy storage solutions, particularly battery storage, as complements to the intermittency of renewable energy sources such as wind and solar. These storage projects are critical to supporting grid stability and reliability. Utility-scale solar captured the largest share of both announced investment in 2023 (US$92 billion) and actual investment (US$52 billion) across 38 states. Solar recorded 34% growth in actual investment over the past year, while storage jumped 51%.¹¹ Similarly, the US battery storage market had a record-setting year in 2023, adding 2,354 megawatts (“MW”) of installed capacity to the grid in the third quarter of 2023 alone.¹² It is expected that the US battery storage market will install an estimated 63 GW between 2023 and 2027.¹³ As of 2023, there is approximately 8.8 GW of operational utility-scale battery storage in the United States.¹⁴
   
   
6. Even with the Downplay of ESG by Certain Investors, Renewables Investment Stayed Strong: Despite the current backlash in the market on ESG initiatives, companies with strong ESG profiles are not only more likely to attract more investment and support from stakeholders, but they are also more likely to align their own investments with their ESG and net carbon goals. The recent tensions for and against ESG initiatives do not seem to have slowed down investment in renewable energy as businesses are still looking to lead the charge to a greener future.
   
   
7. Infrastructure Investment in Energy Transition: Infrastructure funds and strategics are playing a crucial role in financing renewable energy and energy transition projects, such as carbon capture and hydrogen, and supporting the transition to a low-carbon economy. These investments are expected to contribute to modernizing energy infrastructure, reducing greenhouse gas emissions, and enhancing energy security. 

B. 2023 TRANSACTION SUMMARY 

In this section is a summary of the largest transactions (in terms of fiscal deal size) in the renewable energy sector from 2023 (the “2023 Transactions”): 

1. Hydro-Québec acquired Great River Hydro (“GRH”) from ArcLight Capital Partners LLC (“ArcLight”) on February 10, 2023, for $2 billion. GRH owns a portfolio of battery storage and solar development projects, as well as thirteen hydroelectric generating stations along the Connecticut and Deerfield Rivers in New England, with a total capacity of 589 MW. A portion of GRH’s generation output is sold to utilities and regional municipalities pursuant to long-term supply agreements.
   
   
2. RWE Renewables Americas LLC (“RWE”) acquired Con Edison’s Clean Energy Businesses, Inc. (“CEB”) on March 1, 2023, for $6.8 billion. RWE is a multinational energy company headquartered in Germany. CEB is an operator and developer of renewable energy projects in the United States.
   
   
3. Manulife Investment Management (“MIM”) invested $500 million of development capital into CleanCapital on June 9, 2023. CleanCapital is a commercial solar asset owner in the United States and plans to use the new funds to acquire renewable energy assets throughout the country. MIM is the global brand for Manulife Financial Corporation’s global wealth and asset management segment based in Toronto, Canada.
   
   
4. Invenergy Renewables Holdings LLC (“Invenergy”) received $1 billion in capital from Blackstone Infrastructure Partners (“Blackstone”) on June 21, 2023. As the largest private renewable energy company in North America, Invenergy and its affiliates are engaged in developing, owning, and operating renewable transmission and storage facilities around the globe.
   
   
5. Intersect Power LLC (“Intersect”) was provided with $800 million of debt financing on June 27, 2023. Intersect is a clean energy company that assists in developing some of the world’s largest clean energy resources including low-carbon electricity and fuels, with projects located in California and Texas. Intersect’s portfolio consists of 2.2 GW of solar energy capacity and 1.4 GW hours of energy storage either being developed or in operation.
   
   
6. Renewa received $450 million of development capital from QIC on August 10, 2023. Renewa is a leading renewable energy land and infrastructure investor, with more than 30 GW of projects and one of the largest clean energy land portfolios in the United States. QIC is an Australian investment management company with $68.4 billion in assets under management.
   
   
7. IRG Acquisition Holdings (“IRG”) acquired a 1,365 MW wind and solar portfolio from American Electric Power (“AEP”) for $1.5 billion on August 15, 2023. IRG is a partnership between Invenergy, CDPQ (Caisse de dépôt et placement du Québec), and several funds owned by Blackstone Infrastructure Partners. AEP provides electricity, gas, and retail energy services to millions of customers.
   
   
8. AB CarVal entered into a financing agreement to supply $700 million of development capital to Peregrine Energy Solutions LLC (“Peregrine”) on August 29, 2023. As a multi-technology clean energy platform, Peregrine is focused on utility-scale energy storage. Peregrine’s goal is to continue to develop, build, and manage renewable energy assets and standalone battery storage systems. AB CarVal is a global alternative investment manager with approximately $17 billion in assets under management.
   
   
9. Ørsted acquired Eversource Energy’s (“Eversource”) 50% interest in an offshore wind lease area for $625 million on September 7, 2023. Danish company Ørsted is a global clean energy leader with an expanding portfolio of clean energy assets and partnerships within the United States. Ørsted is involved in on shore and offshore wind-based energy, solar, storage, and e-fuels. Eversource is an energy delivery company in New England, serving approximately 4.4 million customers.
   
   
10. Spanish Company Repsol acquired American company ConnectGen on September 7, 2023, for $768 million. ConnectGen is a renewable development company with over 20,000 MW of wind, solar, and storage projects in its development pipeline within the United States.  Repsol is a global multi-energy provider that is present at every step of the energy value chain.
    
    
11. The United States Department of Energy (“DOE”) closed on a $3 billion partial loan guarantee to Sunnova Energy International Inc.’s (“Sunnova”) Project Hestia on September 28, 2023. Sunnova is an energy as a service provider in the United States with a focus on making clean energy more accessible and affordable for American consumers. Project Hestia is Sunnova’s new solar loan channel that was created to expand access to clean energy. Sunnova was represented by Baker Botts L.L.P. in the transaction.
    
    
12. Plus Power LLC received $1.8 billion in debt and tax equity financing on October 17, 2023. Many industry lenders and investors contributed to the fund, including Deutsche Bank, Société Générale, and Foss & Company. Plus Power LLC is involved in developing and operating utility-scale energy storage projects.
    
    
13. Intermediate Capital Group (“ICG”) provided Enfinity Global (“Enfinity”) with $322,140,000 (€300 million) of development capital on October 25, 2023. An additional $107,420,000 (€100 million) of equity funding is predicted to close within a one-year period. ICG is a global alternative asset manager that provides flexible capital solutions to help companies develop and grow. Enfinity is a renewable energy and sustainable services company based in the United States, with a presence throughout the renewable energy industry.
    
    
14. Brookfield Renewable Partners (“Brookfield”) acquired Deriva Energy on October 25, 2023, for $2.8 billion. Brookfield, an affiliate of Brookfield Asset Management, is one of the largest owners and operators of renewable power plants, with around 90,000 MW of combined development and operational capacity. Formerly known as Duke Energy Renewables, Deriva Energy has 5,900 MW of developed and under construction wind, solar, and storage assets throughout the United States.
    
    
15. Global Atlantic Financial Group (“Global Atlantic”) sold its 33% interest in Southern Power’s renewable portfolio to APG Group for $1 billion on November 14, 2023. Global Atlantic, a subsidiary of global investment firm KKR, is an insurance company that serves both individuals and businesses. APG Group is a pension provider in the Netherlands, managing the pensions of 4.8 million people.
    
    
16. Longroad Energy Holdings LLC (“Longroad”) closed $600 million in debt financing on November 27, 2023. Apterra Infrastructure Capital led the syndicated corporate credit facility, which was comprised of a $275 million term loan, a $175 million revolving credit facility, and a $150 million letter of credit facility. Longroad specializes in renewable energy project development and renewable operating assets and services. 

C. LOOKING AHEAD TO 2024

The year ahead is expected to be another transformative period for the United States’ renewable energy landscape, characterized by significant growth, innovation, and collaboration across various fronts. 

Foreign investment in the United States’ renewable energy market is anticipated to continue, driven by the market’s attractiveness, supportive regulatory frameworks, and access to capital. This influx of investment will contribute to the expansion of renewable energy capacity, with a diverse range of technologies including solar, wind, hydroelectric, and energy storage.

Policy support at the federal, state, and local levels will continue to remain crucial in driving renewable energy deployment in 2024. Measures such as tax incentives, renewable portfolio standards, and clean energy mandates will provide regulatory certainty and financial incentives for renewable energy investments, further accelerating market growth.

With the above in mind, 2024 presents an opportunity for significant progress in the United States’ renewable energy sector. As the country continues to prioritize clean energy and sustainability, the renewable energy sector is poised to play a central role in shaping a more sustainable and resilient energy future.

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¹ Today in Energy, 2022, published by the US Energy Information Administration (“EIA”).
² Article, September 2022. 
³ Short-Term Energy Outlook, published by the EIA.
⁴ See footnote 1.
⁵ Short-Term Energy Outlook - U.S. Energy Information Administration (EIA)
⁶ Article, February 2024.
⁷ EMP Article - U.S. State Renewables Portfolio & Clean Electricity Standards: 2023 Status Update
⁸ Utility Carbon-Reduction Tracker™ | SEPA (sepapower.org)
⁹ 2030 Club | SEPA (sepapower.org)
¹⁰ Feature: US IRA causing shifts to renewable energy tax equity market | S&P Global Commodity Insights (spglobal.com)
¹¹ Database (cleaninvestmentmonitor.org)
¹² Wood Mackenzie Power & Renewables/American Clean Power Association, US Storage Energy Monitor, at 5. (U.S. Energy Storage Monitor | Wood Mackenzie)
¹³ Ibid.
¹⁴ EIA - U.S. Battery Storage Market Trends

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