Snapshot of the Spanish Energy sector by Alvarez & Marsal from a transactional perspective: end of volatility and opportunities in new technologies

A&M Spain has analyzed the Spanish energy sector from an M&A perspective, examining trends and technologies and providing insights on transactional activity in the short to medium term. This analysis is conducted through the lens of a business plan review, analyzing:

Macroeconomic sector
Microeconomic sector
Competitors
Revenues
Costs
Prospects

Later, a focus is placed on the market for each of the most relevant technologies.

Due to recent investments in renewable traditional sources, renewable installed capacity has increased to represent 64% of the total (compared to 50% in 2019). This trend is expected to continue upward as the 2030 target (PNIEC) is set at 81%, generating transactions in the short to medium term.

This is reflected in renewable energies accounting for 90% of transactions in the 2021-2023YTD period, with solar and wind accounting for 62% and 15%, respectively.

Simultaneously, there is a significant disparity between capacity growth (CAGR 8.8% 2019-2023YTD) and electricity demand, which has even decreased (CAGR -2.1% 2019-2023YTD). While this disparity creates price uncertainty due to the impact of oversupply, we believe it represents investment opportunities with an opportunistic approach in other areas of the value chain, such as storage, the grid, and other businesses, to boost electricity demand.

From a governmental support perspective, the updated draft of the Integrated National Energy and Climate Plan (PNIEC) has recently been published. While it does not resolve all regulatory uncertainties, it sets an ambitious path for sector development that will undoubtedly generate more transactions. Some notable points regarding the updated plan compared to the previous one:

In summary, at A&M, we are optimistic that transactional activity in the sector will continue. However, transactions will not happen at the recently seen price levels, and valuations must be revisited. Investors willing to assume higher risks will be directed towards developing technologies that provide higher returns.

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