New Zealand’s energy transition continued to be a hot topic in 2024, bringing both challenges and opportunities in the M&A space. We have seen a steady number of renewable energy projects with more than 150 projects publicly announced as at September 2024. We expect this to further increase in 2025 with a number of unannounced projects already in the pipeline. 

We also expect an increase in M&A activity. First and foremost, New Zealand requires significant private investment to achieve its net-zero aspirations and meet projected electrification demand (acknowledging
current demand side constraints). For a number of reasons, not all projects in the pipeline will complete (or complete under current ownership), so there remains scope for new entrants, strategic investment and, more relevantly, consolidation or sell down by existing investors/developers. 

M&A in renewables in 2024

2024 was a busy year for M&A in the renewables sector. Of particular note:

• In June, SC Oscar, a Singapore-based fund management company specialising in renewable energy investments, acquired 100% of utility-scale solar developer Rānui Generation Ltd for an undisclosed sum. The acquisition included four development-stage solar projects in the North Island – construction of one, the 31MW Twin Rivers solar farm near Kaitaia, has since commenced. SC Oscar has stated that it is actively considering a number of investments in the Asia Pacific renewable energy space.
• Lodestone announced in August the acquisition of two grid level solar sites in the Manawatu from Kiwi Solar.
• In August, Genesis Energy secured an advanced stage, 127 MWp consented site near Edgecumbe in the Bay of Plenty from Helios Energy. The site is expected to start generating electricity in 2026.
• In September, Contact Energy Ltd entered into a Scheme Implementation Agreement to acquire up to 100% of the shares in generator and wholesaler Manawa Energy Ltd through a scheme of arrangement. The deal values Manawa at NZD1.86 billion and, with Contact assuming Manawa’s debt, gives Manawa an enterprise value of NZD2.3 billion, representing a 47% premium. Contact’s rationale for the acquisition is the portfolio synergies that would flow from Manawa’s (mainly hydro and winterweighted) generation assets, creating a more diversified, resilient, and efficient Contact business. If the deal goes ahead, Contact will become New Zealand’s second-largest generator with 25% of the market. The deal is subject to Commerce Commission clearance with a decision due by 31 March 2025. Contact is targeting implementation in the first half of 2025.
• Lastly, Genesis Energy confirmed in October that it was taking a NZD64 million, 65% stake in EV charging company ChargeNet NZ Ltd. The move reflects Genesis’ ambition to be one of the major players in EV charging networks – buying an established business is an efficient option to achieve this. ChargeNet has more than 400 fastcharging points in a nationwide network and Genesis’ investment is expected to boost the pace of network development.

The year ahead

We expect M&A activity in the renewable energy sector to increase in 2025. Following the outcome of the US election, the Asia Pacific region is seen as an attractive proposition for offshore funders seeking investments in the sector. With the Government’s pledge to double renewable energy by 2050 and regulatory changes in train to achieve this (including listing 22 renewable energy projects in the Schedule to the Fast-track Approvals Act and a review of the Overseas Investment Act), New Zealand should see its share of this investment. That said, the lack of a deep Power Purchase Agreement (PPA) market and continued Overseas Investment Office scrutiny until at least the end of 2025 may be dampening offshore investment. There are also opportunities for domestic companies seeking synergies via strategic investments, such as those undertaken by Contact and Genesis in 2024.

There remain a large pipeline of renewable energy projects at varying stages of development in New Zealand (a number of which are publicly announced) and many will be looking at sell down or consolidation opportunities. The Electricity Authority’s generation investment pipeline (as at September 2024) lists 164 projects, predominantly wind and solar. This pipeline will undoubtedly see M&A for a variety of reasons, including:

• Independent developers may continue to struggle to secure bankable offtake arrangements, such as a PPA for a project. The New Zealand PPA market is immature, and a lack of offtake impacts funding decisions, so some projects may need to be sold.
• A number of early-stage projects may, after investigation, be found unfit for their original development purpose, but grid connection queues and other valuable land rights may see opportunities for acquisition and repurposing.
• There can be a lack of cash flow to develop projects. Early-stage development activities are not without material cost (for example land rights fees, Transpower grid connection fees and bonds etc). As such, the longer a project takes to reach final investment decision, the more pressure goes onto developer cash flow, leading to developers needing to free-up certain projects.
• A number of projects will secure sufficient rights to make them attractive to certain developers looking for ready to build projects (or almost ready to build projects).

Finally, outside of M&A in the new project space, amidst concerns about competition and electricity affordability, there have been calls (including recently by the OECD) for investigation into splitting the retail and generation arms of New Zealand’s gentailers. If such a split were mandated, it would trigger a significant amount of M&A. At this stage, the Energy Competition Taskforce programme includes looking into “virtual disaggregation” (requiring gentailers to offer a minimum volume of their flexible generation base to buyers) only and as a back-stop measure to other initiatives. 2025 may see more clarity on if and when any such options might occur.

Overall, expect 2025 to see a further increase in M&A activity in renewable generation space. For those looking at options to buy or sell, it’s important to have advisers well versed in the project development lifecycle (whether that be legal, commercial or technical). MinterEllisonRuddWatts’ energy team is well placed to assist on all stages of project acquisition through to construction, completion, financing and commissioning.