Power transactions

and trends

Q1 2019
Contents
Global summary
Americas
Europe
Asia-Pacific
Africa and the Middle East
Appendix
Power transactions and trends Q1 2019
Global summary

Q1 Chart 1: Global P&U deal value and volume by segment

(announced asset and corporate-level deals, Q1 2017–Q1 2019)
120
140

Deal volume (number of deals)

100 120

Deal value (US$b)

Global deal value US$20.6b 80

60
100
80
60
40
40
20 20
Renewables 0 0
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019

Largest segment
US$12.7b
Generation Integrated utility Energy services Renewables
Gas utility Water and wastewater Volume

Chart 2: Global P&U deal value and volume by region

(announced asset and corporate-level deals, Q1 2017–Q1 2019)
Americas 120
140

Deal volume (number of deals)

Largest region
US$9.1b
100 120

Deal value (US$b)

80 100
60 80
60
40
40
20 20

127
0 0
Total deals Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019

Americas Asia-Pacific Europe Africa and Middle East Volume

Note: All transaction information is EY analysis with data sourced from Mergermarket and S&P Global Market Intelligence.

Page 3
 Global summary
Demand for renewables drives M&A activity
In 2019, we saw evidence of the impact of economic headwinds on overall mergers and acquisitions (M&A) activity, with global deal value declining 33% from Q4 2018 to
US$20.6b. Deal value increased in the renewables and water and wastewater segments quarter on quarter while decreasing in the remaining segments. Across all regions, a
few trends emerged:
Renewables drive deal value and volume
Q1 2019 saw 56% — 71 of 127 — deals involve renewables, which contributed a total
value of US$12.7b (61% of total deal value). Europe led the activity with US$5.4b,
or 42.5%, of total renewables deal value. Financial sponsors and strategics are
firmly committed to renewable energy investments driven by market potential,
customer preference and corporate sustainability goals, resulting in a significant
pool of investment capital.
Corporates and utilities drive development of renewables
France’s ENGIE announced it would add another 9 GW of renewable capacity by
2021, while Italian energy giant Enel announced plans to spend 80% of its US$30b
capital expenditure through 2021 on renewables and grid operations. In the US,
over 200 companies, including Facebook and Alphabet’s subsidiary, Google
launched the Renewable Energy Buyers Alliance with the goal to bring 60 GW of
new renewables online in the US by 2025.
Investment challenges for the fossil fuel industry
The Norwegian Government proposed the phaseout of oil and gas exploration and
production companies from its US$1t sovereign wealth fund. The German
Government announced plans to shut all of its 84 coal-powered plants by 2038 and
replace them with renewable energy plants. In the US, a federal judge dismissed a
lawsuit that sought to force an Arizona water agency to buy electricity from a local
2.3 GW Navajo coal plant. The plant may be forced to close by the end of the year.
Page 4
Interest in offshore wind is on the rise
Development of offshore wind capacity has accelerated with Australia, Japan,
China, Korea, India and the Netherlands all recently announcing new projects. In the
second largest deal of the quarter, German asset manager Commerz Real joined
consortium members to buy an 80% stake in 402 MW German offshore wind farm
Veja Mate for US$2.6b. The US offshore wind market is at the cusp of a tipping
point as interest in offshore leases continues to grow.
Governments continue to push for more clean energy
Governments around the world continue to promote clean energy policy. In Europe,
Greece and France announced new energy plans promoting renewables growth,
while in the US, local government continues to drive renewables progress. New
Mexico recently joined California, Hawaii, Washington, DC and Puerto Rico to set a
100% carbon-free goal. In Asia-Pacific, India has set a target of 100 GW of solar
power by 2022.
Increasing convergence as oil and gas (O&G) majors enter the sector
Investment by O&G companies into the P&U sector is rising across all regions,
increasing sector competition. Shell’s New Energies division made two strategic
acquisitions as they continue to take steps towards their target of becoming the
world’s largest electricity company by 2035. Our CCB report revealed that O&G is
the sector that executives expect to see the most convergence or blurring of sector
boundaries — this trend will continue to influence M&A dynamics in 2019.
 Global summary

Q1 2019 at a glance

Quarterly investment profile

Americas Europe Asia-Pacific Africa and the Middle East
US$9.1b deal value, 35% decrease US$6.8b deal value, 27% decrease US$4.1b deal value, 45% decrease US$0.6b deal value in Q1 2019.
from US$13.9b in Q4 2018. from US$9.3b in Q4 2018. from US$7.4b in Q4 2018.

US$3.7b deal value in renewables US$5.4b deal value in renewables US$3.6b deal value in renewables Renewables investment continues,
assets. assets. assets. with increasing focus on off-grid
solutions.

Partnerships between financial French and Greek Governments Hong Kong-based privatization deal Investments in smart technologies
sponsors and strategics are on the announced plans to increase dominated activity. boosted by government support.
rise. renewables investments.

Page 5
 Global summary
Q1 2019 at a glance (continued)
Capital outlook
Americas
Utilities and corporates will continue
to push investment in renewables.
Investment in battery storage will
ramp up as utilities plan big-ticket
projects.
Activity in Latin America will increase,
driven by investment in infrastructure
and asset sales led by US and
European utilities.
Page 6
Europe
Utilities’ decarbonization plans will
drive investment in renewables.
Signs that the EU could miss its 2030
renewables and energy savings goals
may increase the need for renewables
investment.
Electric vehicle (EV) investment will be
boosted by tighter CO2 emission caps
and planned investments by utilities.
Asia-Pacific
Policy support will keep Bangladesh an
investment hotspot for renewables.
Investments in EVs will accelerate,
supported by policy support across
India and New Zealand.
Reforms in Thailand’s behind-the-
meter segment will boost investment
in distributed solar.
Africa and the Middle East
Foreign and government investment in
renewable energy development will
continue.
Investment in off-grid solutions will
increase, bridging the gap between
power demand and supply.
Energy reforms will continue amid a
challenged economic environment.
 Global summary

Global capital flows — Q1 2019

Investment activity globally by country, Q1 2019 (US$b)

Investor country Capital flows
US Greater China Germany Canada Luxembourg UK Rest of the world Total receipts
• Greater China was the top
global investor for the
US 2.4 1.3 - 0.2 0.3 4.2 quarter, investing US$3.4b
domestically and US$0.9b
overseas.
Greater China 3.4 3.4
• The UK was the top
outbound investor,
Germany 2.6 2.6
investing US$1.9b in
foreign countries, including
Canada 0.5 1.8 2.3 US$0.7b in Mexico and
Target country

US$0.5b in Luxembourg.
Luxembourg 0.5 1.1 1.6 • The US continued to attract
the most investment, with
investments domestically
UK 0.8 0.3 1.1
and inbound from Canada
and the UK.
Rest of the world 0.1 0.9 1.2 3.2 5.4

Total investment 3.0 4.3 2.6 3.1 2.7 4.9 20.6

0–5 5–10 10–20 20–30

Note: Numbers may not add to total due to rounding.

Page 7
 Global summary

Global returns

Utilities gain value in tandem with global market growth Quarter-to-date TSR

• Q1 saw global markets rally after their decline in value in Q4 2018. The S&P Global TSR in % (from 1 January 2019 to 31 March 2019)
1200 gained 13.7% this quarter compared to a decline of 13.1% in the prior quarter.
• The EY Global Utilities Index1 underperformed the market, returning 10.9%. The risk
S&P Global 1200 13.7
of rising interest rates may have impacted the performance of the sector relative to
total global returns. EY Global Utilities Index 10.9

Chart 3: Total shareholder return – global comparison

120%

115%

110%

105%

100%

95%

90%

85%

80%
01/01/2019 08/01/2019 15/01/2019 22/01/2019 29/01/2019 05/02/2019 12/02/2019 19/02/2019 26/02/2019 05/03/2019 12/03/2019 19/03/2019 26/03/2019

S&P Global 1200 TSR (%) EY Global Utilites Index TSR (%)

1The EY Global Utilities Index benchmarks the returns of 229 utilities globally using data sourced from S&P Capital IQ and other publicly available information. For a comprehensive list of utilities contained within the analysis, please refer to the appendix.

Page 8
 Global summary

Regional TSR

American utilities performed significantly better than their global peers

QTD TSR
Chart 4: Total shareholder return — regional comparison TSR in % (from 1 January 2019 to 31 March
115% 2019)
Americas
110% S&P 500 14.8
EY Americas Utilities Index 14.5
Europe
105%
STOXX Europe 600 12.4
EY Europe Utilities Index 8.4
100% Asia-Pacific
Nikkei 225 9.6
95% EY Asia-Pacific Utilities Index 8.2

90% Valuations
85% Americas Europe Asia-Pacific
01/01/2019 15/01/2019 29/01/2019 12/02/2019 26/02/2019 12/03/2019 26/03/2019
The QTD TSR of the EY The QTD TSR of the EY Europe The EY Asia-Pacific Utilities
Americas Utilities Index2 was Utilities Index was 8.4%, which is Index performed slightly lower
14.5%, which is lower than the significantly lower than the QTD than the Nikkei 225, the Asia-
regional market (as TSR for the European Pacific regional benchmark
S&P 500 TR (total return) % EY Americas Utilites Index TSR (%) benchmarked by the S&P 500 benchmark index STOXX Europe index. Asia-Pacific utilities
STOXX Europe600
Stoxx Europe 600TR
TR(total
(totalreturn)
return)%% EY Europe Utilites Index TSR (%) index), which returned a 600, which returned 12.4% for returned 8.2% QTD compared
quarterly TSR of 14.8%. the quarter. with the market at 9.6%. The
Nikkei 225 TR (total return) % EY Asia-Pacific Utilites Index TSR (%) However, the EY Americas QTD return of the EY Asia-
Utilities Index outperformed Pacific Utilities Index was
Europe and Asia-Pacific (QTD the lowest of all regional EY
TSR of 8.4% and 8.2%, utilities indices.
2EYanalysis is based on data sourced from S&P Capital IQ and other publicly available data. The EY Americas Utilities Index benchmarks the returns of 101 utilities respectively).
headquartered in the Americas, the EY Europe Utilities Index benchmarks the returns of 54 utilities headquartered in Europe, the EY Asia-Pacific Utilities Index
benchmarks the returns of 73 utilities headquartered in Asia-Pacific. For a comprehensive list of utilities contained within the analysis, please refer to the appendix.

Page 9
 Global summary

TSR and valuations segment dashboard

Q1
QTD TSR
TSR in % (from 1 January 2019 to 31 March 2019)
EV/FY2 EBITDA
(At 31 March 2019)
Americas
10.5x • Generation’s TSR was the highest performing in the region, and this segment
Large market capitalization integrated 11.7%
outperformed the broader market, a continued trend from Q4 2018. The water
Medium and small market capitalization integrated 15.0% 9.6x and wastewater segment TSR was the lowest of all segments in Q1 across the
Americas.
Gas utility 14.0% 11.1x
• The large market capitalization integrated segment and the medium and small
Generation 25.7% 8.3x market capitalization segment TSR performed better than in other regions.
• The Americas utilities EV/FY2 EBITDA sector traded at 10.7x, the highest of all
Renewables 17.7% 11.7x
the regions, with water and wastewater assets valued at the highest multiple of
Water and wastewater 9.0% 13.6x 13.6x for Q1.
EY Americas Utilities Index 14.5% 10.7x
Large market capitalization integrated 9.3% 7.5x
Europe
Medium and small market capitalization integrated 4.0% 5.0x • The renewables segment QTD TSR was the highest performing of the region
(15.6% TSR QTD), while the generation segment TSR performed the worst
Gas utility 12.1% 9.8x (2.4% TSR QTD). This is a reversal from Q4 2018 performance.
Generation 2.4% 5.7x • The water and wastewater segment TSR performed worse than in other
regions but remains valued above the EY Europe Utilities Index average at 8.5x
Renewables 15.6% 9.1x EV/FY2 EBITDA compared to 7.3x EV/FY2 EBITDA.
Water and wastewater 8.4% 8.5x • The European utilities sector was valued at the lowest EV/FY2 EBITDA multiple
during Q1 across all regions. The renewables and gas utility segments traded
EY Europe Utilities Index 8.4% 7.3x at the highest valuation across Europe.
Large market capitalization integrated
Medium and small market capitalization integrated
2.2% 8.3x
Asia-Pacific
6.3% 10.4x
Gas utility 8.7% • Renewables were the highest performing QTD TSR segment in the region, after
14.8x
the poor performance in Q4 with -7.2% returns.
Generation -0.6% 7.8x • The generation segment was the lowest performing segment across the sector
Renewables 27.6% and region with QTD TSR of -0.6% in contrast to 11.3% TSR in the prior
12.5x
quarter.
Water and wastewater 14.1% 9.9x • The Asia-Pacific utilities sector EV/FY2 EBITDA traded at 10.3x. The gas
EY Asia-Pacific Utilities Index 8.2% utility segment traded at 14.8x EV/FY2 EBITDA, highest across all the other
10.3x
regional segments.
TSR >20% higher than the regional sector average; EV/FY2 EBITDA >20% discount compared with the regional sector average

TSR 0% to 20% higher than the regional sector average; EV/FY2 EBITDA between a 0% to 20% discount compared with the regional sector average

TSR 0% to 20% lower than the regional sector average; EV/FY2 EBITDA between a 0% to 20% premium compared with the regional sector average Note: EY analysis is based on data sourced from S&P Capital IQ. Please see the appendix for
the detailed definitions, the company segment definitions and the company tagging for the
TSR performance >20% lower than the regional sector average; EV/FY2 EBITDA >20% premium compared with the regional sector average valuations analysis.

Page 10
 Global summary

EY Global Transaction Advisory Services P&U contacts

Miles Huq Sara Richardson Mike C Morse Anjushi Joshi

EY Global P&U TAS Leader EY Global P&U TAS Resident TAS Senior Manager EY Global P&U Analyst

+1 410 783 3735 +61 7 3243 3758 +1 410 234 4330 +91 124 619 2734
miles.huq@ey.com sara.richardson@au.ey.com michael.c.morse@ey.com anjushi.joshi@gds.ey.com
@MilesHuq @sararichardson2 @anjushi_joshi

Page 11
Americas
Renewable energy drives
deal volume
Power transactions and trends Q1 2019
Americas

“ US$9.1b
Transaction highlights

Financial sponsors focus on renewables

Certain utilities are deal value, 35% decrease from Q4 2018 • Kohlberg Kravis Roberts & Co. L.P. (KKR) agreed to make a
US$900m equity investment in NextEra Energy Partners to
changing their facilitate the acquisition of a 611 MW renewables portfolio.

thinking to ensure
they are not getting
US$3.7b Shareholder activism continues
• Sempra continued its process of simplifying its business
structure by selling 724 MW of operating wind and battery
contributed by renewables asset M&A, dominated by seven assets to AEP for US$1.1b. The deal follows Sempra’s
left behind by multimillion-dollar deals US$1.5b sale of renewables assets to Consolidated Edison
last year.
focusing on Chart 5: Americas deal value and volume by segment Chinese renewables investment targets Latin America
renewable and (announced asset and corporate-level deals, Q1 2017–Q1 2019)
• In the largest deal of Q1 in Latin America, Chinese-based
emerging technology 60
CGN Energy International agreed to acquire wind and solar
projects totaling 540 MW combined capacity from Enel for

Deal volume (number of deals)

investment.
40
50 US$783m. Overall, Latin American countries attracted
US$2.4b or 26% of Americas power and utilities (P&U)
Deal value (US$b)

Financial sponsors 40 30
investment this quarter.
30
have a large pool of 20
20 Corporate distress and restructuring drive divestitures
• Canadian utility ENMAX acquired US electricity network
capital and are eager 10
10
utility Emera Maine from Emera Inc. for US$1.3b. The deal
furthers Emera Inc.’s strategy to reduce debt and support
to engage. 0
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
0
its US$4.9b regulated capital expenditure program. Also
this quarter, GE continued restructuring, selling its stake in
Miles Huq, several wind farms to Enel for approximately US$250m.
Generation Integrated Energy services
EY Global P&U TAS Leader Renewables Gas utility Water and wastewater
Volume

Page 13
 Americas

Renewables and emerging technology drive the capital agenda

Another 100% renewable portfolio

standard (RPS) goal
• In March, the New Mexico State House
passed the Energy Transition Act
requiring 100% carbon-free generation
by 2045. The state joins Hawaii,
California and Washington, DC, which
all have 100% renewables targets. In
late March, Puerto Rico’s legislature
also approved a 100% renewable
energy target by 2050.
More investment in new technology
• Duke Energy filed a US$76m plan to
develop electric vehicle (EV) charging
infrastructure in North Carolina.
Michigan utility Consumers Energy
introduced a US$10m, three-year plan
to incentivize deployment of EV
charging stations in the region. In
Atlanta, Georgia Power announced
plans to set up a 1.4 MW microgrid with
Georgia Institute of Technology.
Asset divestments continue
• Increased shareholder activism, mainly
driven by Elliott Management and
Bluescape Resources, has resulted in
billions of asset divestments, most
recently at Sempra, which has divested
approximately US$2.5b of renewable
and natural gas storage assets.
• In addition, rising corporate distress in
Canada and the US has led to asset
sales to strengthen balance sheets.

“
Clean energy will develop into a large and stable market,
attracting investment beyond current expectations —
from both corporate and financial sponsors.
Miles Huq,
EY Global P&U TAS Leader

Page 14
 Americas

Deal value dropped, but the US remained investors’ top pick

Americas regional capital flows — Q1 2019 (US$b)

46% of total Americas
investment occurred in
0.5 the US. 90% of these 53% (US$4.8b) of
0.3
transactions were all regional deals
0.2 Canada conducted by corporates, were domestic.
2.3
1.3 with more than half (57%)
USA 1.8 domestic buyers.
4.2
2.4

“
We expect US corporate buyers to take
Brazil
the lead in domestic M&A as they
0.8 grapple with the ongoing changes in the
power and utilities sector. Facing flat
Mexico 0.8
0.7 load growth and a rapidly changing
environment, small to midsize utilities
0.7
appear ripe for consolidation.
Top investor countries/regions Miles Huq,
Canada US UK Greater China Philippines Italy
EY Global P&U TAS Leader
Note: Percentages may not add to 100% due to rounding.

Page 15
 Americas

Top five Americas deals — Q1 2019

“
Announcement Target Target country/ Bidder Deal value Bidder rationale Segment
date bidder country (US$b)

Aligns with ENMAX’s strategy

ENMAX to grow through expansion of
25 March Emera Maine US/Canada
Corporation
1.3
its regulated utility business
Integrated The sale of Emera
in North America
Maine highlights
NextEra Energy Resources, NextEra Energy
Supports a continued focus
on growing the renewables
corporate distress as
4 March US/US 1.0 Renewables
LLC (six power plants) Partners, LP portfolio through sponsor
drop downs
an opportunity for
investment. This is a
Columbia Basin
28 January
Waneta Expansion
Hydroelectric Project (51% Canada/Canada
Trust; Columbia
1.0
Helps transfer control of the
assets to the people of Generation continuing theme as
Power
stake)
Corporation
Columbia Basin
shown by GE’s asset
American Part of AEP’s plan to invest sale, Southern’s asset
12 February Sempra Renewables, LLC US/US Electric Power 0.9 US$2.2b in contracted Renewables
Company Inc. renewables by 2023 sales last year and
Fits Noverco’s plan to
Dominion’s
27 March Valener Inc. Canada/Canada Noverco Inc. 0.8 Gas utility
privatize Valener
acquisition of
SCANA.
Miles Huq,
EY Global P&U TAS Leader

Note: All deals are announced deals, and the values indicated are disclosed enterprise values comprised of equity and debt components.

Page 16
 Americas

Valuations and TSR snapshot — Q1 2019

Return over time — from base date

In the Americas, the EY Americas Utilities Index recorded
a TSR of 14.5%, slightly underperforming the S&P 500,
1 which returned 14.8%. The top performers in the region
were Crius Energy Trust (93.6%) and Genie Energy
Chart 6: Total shareholder return by segment
(from 1 January 2019 to 31 March 2019)
(42.2%) driven by M&A activity.

130%

The generation segment continued its bullish trajectory 125%

2 with 25.7% returns. This result was driven by the 76.5%
QTD return of TransAlta Corporation. 120%

115%

110%

105%
3 The water and wastewater segment recorded the lowest
TSR of 9.0%, compared to 1.7% TSR in Q4 2018.
100%

95%

90%

4 The EV/FY2 EBITDA of the sector was 10.7x, compared

with 10.5x last quarter.
85%
01/01/2019 15/01/2019 29/01/2019 12/02/2019 26/02/2019 12/03/2019 26/03/2019

S&P 500 TR (total return) % Large market capitalization integrated utility

Water and wastewater assets traded at a premium to Medium and small capitalization integrated utility Gas utility
5 sector EV/FY2 EBITDA at 13.6x — the highest across all
the regions for this asset class.
Generation Renewables
Water and wastewater

Note: EY analysis is based on data sourced from S&P Capital IQ. Please see the appendix for the detailed definitions, the company segment definitions and the company tagging for the valuations analysis.

Page 17
 Americas

Valuations and TSR snapshot — Q1 2019 (continued)

Large market capitalization

Q1
QTD TSR EV/FY2 EBITDA integrated
TSR in % (from 1 January 2019 to 31 March 2019) (At 31 March 2019) • The large market capitalization integrated
segment returned a quarterly TSR of 11.7%,
Large market capitalization integrated 11.7% 10.5x below the regional index average of 14.5%.
Medium and small market capitalization integrated 15.0% 9.6x • The EV/FY2 EBITDA multiple traded at 10.5x,
11.1x which is 2.0% lower than the average regional
Gas utility 14.0%
sector multiple but greater than that recorded
Generation 25.7% 8.3x in Europe (7.5x) and Asia-Pacific (8.3x).
Renewables 17.7% 11.7x
9.0%
Water and wastewater 13.6x
Medium and small market
14.5%
EY Americas Utilities Index 10.7x capitalization integrated
• The medium and small market capitalization
TSR >20% higher than the regional sector average; EV/FY2 EBITDA >20% discount compared with the regional sector average integrated segment returned a quarterly TSR of
TSR 0% to 20% higher than the regional sector average; EV/FY2 EBITDA between a 0% to 20% discount compared with the regional sector average 15.0%, slightly above the regional index
average of 14.5%.
TSR 0% to 20% lower than the regional sector average; EV/FY2 EBITDA between a 0% to 20% premium compared with the regional sector average
• The EV/FY2 EBITDA multiple traded at 9.6x,
TSR performance >20% lower than the regional sector average; EV/FY2 EBITDA >20% premium compared with the regional sector average which is 11.0% lower than the average regional
sector multiple but greater than the results of
Europe and Asia-Pacific at 5.0x and 10.4x,
respectively.

Water and wastewater Renewables Generation Gas utility

• The water and wastewater segment returned a
quarterly TSR of 9.0%, which is below the
regional index average of 14.5%.
• The EV/FY2 EBITDA multiple traded at 13.6x,
27.0% above the average regional sector
multiple and greater than both Europe and Asia-
Pacific (8.5x and 9.9x, respectively).
• The renewables segment returned a quarterly
TSR of 17.7%, which is higher than the regional
index average of 14.5%.
• The EV/FY2 EBITDA multiple traded at 11.7x,
which is 9% above the average regional sector
multiple. The result is greater than that of
Europe (9.1x) but less than that of Asia-Pacific
(12.5x).
• The generation segment returned a quarterly
TSR of 25.7%, above the regional index average
of 14.5%.
• The EV/FY2 EBITDA multiple traded at 8.3x,
22.0% lower than the average regional sector
multiple but greater than that of Europe and
Asia-Pacific, which returned results of 5.7x and
7.8x, respectively.
• The gas utility segment returned a quarterly
TSR of 14.0%, slightly below the regional index
average of 14.5%.
• The EV/FY2 EBITDA multiple traded at 11.1x,
4.0% above the average regional sector
multiple. The result is greater than that of
Europe (9.8x) but less than that of Asia-Pacific
(14.8x).

Note: EY analysis is based on data sourced from S&P Capital IQ. Please see the appendix for the detailed definitions, the company segment definitions and the company tagging for the valuations analysis.

Page 18
 Americas
M&A outlook and investment hotspots
9 GWh
cumulative capacity of energy
storage projects to come
online in the US by 2020
“
Solar plus storage power purchase
agreements (PPAs) are becoming
less expensive than the levelized cost
of energy (LCOE) for combined cycle
natural gas in the US, pressing
utilities to consider adopting this
new technology.
Miles Huq,
EY Global P&U TAS Leader
Page 19
Continued investment in energy storage
• Arizona Public Service is planning to add 850 MW of battery storage and 100 MW of solar by 2020.
Florida Power & Light, the utility owned by NextEra Energy, is planning to build the world’s largest solar
powered battery of 409 MW/900 MWh capacity in Florida. New York State Energy Research and
Development Authority has announced US$350m in incentives to help New York meet its 3 GW energy
storage goal.
Renewables investments to increase
• Utilities in the region are expected to spend US$12.5b in renewable energy capital expenditure in 2019,
despite the US phaseout of investment tax credits (ITCs) and renewable electricity production tax credits
(PTCs). Xcel Energy and Iowa’s MidAmerican Energy have announced 100% carbon-free targets.
Corporates seek more clean energy
• In March, over 200 companies, including Alphabet’s subsidiary Google, Facebook, General Motors and
Walmart, launched the Renewable Energy Buyers Alliance (REBA). REBA’s goal is to bring 65 GW of new
renewable energy online by 2025 and make it easier for corporate buyers to procure clean energy.
Investment activity to increase in Latin America
• EDP’s Brazilian subsidiary has announced plans to invest US$801m in developing the country’s
transmission and distribution (T&D) infrastructure through 2023. Sempra plans to sell its 100% stake in
Chilean utility Chilquinta Energía and 83.6% stake in Luz del Sur in Peru to focus on the US and Mexico
markets. Aguas Nuevas and Esval, two Chilean water and wastewater utilities, have announced plans to
invest US$355m to improve efficiencies and mitigate risks posed by climate change to their operations.
 Americas

EY Americas Transaction Advisory Services P&U contacts

Miles Huq Stephanie Chesnick Mitch Fane Robert A Jozwiak

EY Global P&U TAS Leader EY US P&U TAS Leader EY US Southwest P&U TAS Leader EY US Central P&U TAS Leader
EY US Northeast P&U TAS Leader

+1 410 783 3735 +1 713 750 8192 +1 713 750 4897 +1 312 879 3461
miles.huq@ey.com stephanie.chesnick@ey.com mitchell.fane@ey.com robert.jozwiak@ey.com

Lucio Teixeira Robert Leonard Rafael Aguirre Sosa Bill Armitage

EY Latin America South P&U TAS Leader EY US Southeast P&U TAS Leader EY Latin America North P&U TAS Leader EY Canada P&U TAS Leader

+55 11 2573 3008 +1 704 335 4236 +52 55 5283 8650 +1 416 943 2373
lucio.teixeira@br.ey.com rob.leonard@ey.com rafael.aguirre@mx.ey.com william.armitage@ca.ey.com

Page 20
Europe
Activity driven by
renewables megadeals
Power transactions and trends Q1 2019
Europe

US$6.8b
“
Transaction highlights
Quarter’s largest deal in offshore wind
deal value — down 27% from Q4 2018 • Motivated by corporate sustainability goals,
Veja Mate has an optimum German asset manager Commerz Real joined
risk-return ratio. A future consortium members to buy an 80% stake in

US$5.4b
402 MW German offshore wind farm Veja Mate
technology that is already for US$2.6b.

very well established was Oil major acquires renewables assets

renewables assets deal value, driven by two megadeals • Total Eren, a subsidiary of Total SA, acquired
commissioned on schedule NovEnergia II, a Luxembourg-based renewables
company with a portfolio of 675 MW, for
and to budget; it produces Chart 7: Europe deal value and volume by segment US$1.1b.
(announced asset and corporate-level deals, Q1 2017–Q1 2019)
stable cash flows and 70
Uncertainty prompts asset divestures

makes an effective 60 • UK-based utility SSE announced plans to

Deal volume (number of deals)

60 dispose assets to raise US$1.96b and restore
50
contribution to achieve the
Deal value (US$b)

50 its balance sheet. The move comes after a

40 challenging 2018 for the company that
40
climate protection targets3. 30 30
included a US$543m trading loss, the failed
merger between its electricity retail arm and
20 20
Johannes Anschott, Npower, and the suspension of capacity
Board Member, Commerz Real 10 10 payments.
0 0
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019

Generation Integrated Energy services

Renewables Gas utility Water and wastewater
Volume

Source: EY analysis on publicly disclosed data

3 https://www.commerzreal.com/en/press-release/press-release/commerz-real-und-ingka-group-investieren-ueber-400-millionen-euro-in-nordsee-windpark-veja-mate/

Page 22
 Europe
Renewables dominate investment agenda
Governments boost clean energy
• In January, the French Government published a draft 10-year energy plan
to double its installed renewables capacity to 113 GW by 2028. In
February, Greece introduced its first long-term energy plan that outlined a
framework for driving US$39b of investments in clean energy by 2030.
• In January, the German Government announced plans to shut all of its 84
coal-powered plants by 2038 and replace them with renewable energy
plants. The coal phaseout is estimated to cost US$45.7b.
• Even with these developments, there is debate whether Europe’s draft
National Energy and Climate Plans are sufficient to deliver the EU’s 32%
renewables target for 2030.
“
We are not interested in the power business because we
liked what we saw in the last 20 years. We are interested
because we think we like what we see in the next 20 years …
We can make better returns than the industry has done so
far – 8-12% is the range we’ve been talking about4.
Maarten Wetselaar,
Director, New Energies, Shell
4 https://www.rechargenews.com/transition/1726552/oil-giant-shell-aims-to-be-worlds-biggest-power-company
Page 23
Oil majors focus in on power and utilities
• Netherlands-based oil and gas company Shell has announced plans to
become the world’s largest electricity company by 2035 through owning or
purchasing 61 GW of power capacity. The company plans to invest
approximately US$1b to US$2b of capital per year on new energy
solutions.
• Through its New Energies division, Shell announced the full acquisition of
smart energy storage company Sonnen in February, and the acquisition of
Greenlots, a major EV fast charging infrastructure provider based in the
US.
• Shell, in partnership with energy company Eneco and builder Van Oord,
participated in a highly contested tender to build a 750 MW offshore wind
farm off the Netherlands; the tender closed in March.
• Another oil company, Total, joined with renewables companies Ørsted and
Elicio to announce plans to bid to develop a 600 MW offshore wind farm in
France.
Utilities bullish on renewables investments
• Italy’s Enel announced plans to spend 80% of its US$30b capital
expenditure through 2021 on renewables and grid operations. Q1 saw the
company acquire US$256m of renewables assets across the Americas and
Asia-Pacific.
 Europe

Germany attracts most investment

Europe regional capital flows — Q1 2019 (US$b)

0.3
78% of deal 56% of
value was transactions
Iceland UK
0.3
concentrated in (US$3.8b) were
1.1
0.8
three countries: domestic deals
0.3 Germany, with most
Luxembourg (US$3.4b)
and the UK. conducted by
financial investors.
0.5

Luxembourg
1.6
0.5
2.6
Russia
0.5 “
While financial investors have stepped up
their game by acquiring renewables assets
1.1 (US$3.9b), we are seeing increased
Germany
2.6 greenfield investment commitments from
utilities. Big utilities, such as Iberdrola and
ENGIE, plan to invest more than US$17b in
renewables by 2022.
Top investor countries/regions
Miles Huq,
Germany UK France Switzerland Australia Japan EY Global P&U TAS Leader
Note: Percentages may not add to 100% due to rounding.

Page 24
 Europe

Top five Europe deals — Q1 2019

Announcement Target country/bidder Deal value

date
Target
country
Bidder
(US$b)
Bidder rationale Segment Investors’ growing
interest in both offshore
KGAL GmbH & Co. Supports Commerz Real’s
Veja Mate
KG; Ingka Holding sustainability goal to achieve a 2020 and onshore wind energy
Offshore Project
13 February
GmbH (80%
Germany/Germany B.V.; Commerz Real 2.6 target of renewable energy Renewables highlights the increasing
AG; wpd invest production exceeding energy
stake)
GmbH consumption maturity of this
technology.
Aligns with bidder’s strategy to
expand in the European market by
27 February NovEnergia II Luxembourg/France Total Eren 1.1 enabling market entry into Renewables
Luxembourg; Total Eren is already
present in France, Greece and Italy

SSE Plc
(Dunmaglass
wind farm)
(35.5% stake); Greencoat UK Expands Greencoat’s portfolio of
1 February UK/UK 0.6 Renewables
SSE Plc Wind Plc renewable energy assets
(Stronelairg wind
farm) (35.5%
stake)

En+ Group plc Transaction is part of a securities

28 January (10.55% stake) Russia/Switzerland Glencore Plc 0.5 swap that was done to facilitate Generation
delisting of En+ Group

Miya Supports bidder’s strategy to invest

Bridgepoint Water and
29 January Luxembourg Luxembourg/UK 0.5 in operationally strong natural
Advisers Limited wastewater
Holdings S.a.r.l resources businesses

Note: All deals are announced deals, and the values indicated are disclosed enterprise values comprised of equity and debt components.

Page 25
 Europe

Valuations and TSR snapshot — Q1 2019

Return over time — from base date

The EY Europe Utilities Index underperformed Chart 8: Total shareholder return by segment
with a quarter-to-date return of 8.4%, compared (1 January 2019 to 31 March 2019)
1 with the regional benchmark — STOXX Europe 600
— with a return of 12.4%. 120%

115%

Renewables remained the highest performer in

the region, driven by the performances of Falck 110%
2 Renewables S.p.A. (37.9%), Terna Energy Societe
Anonyme Commercial Technical Company S.A. 105%
(21.6%) and Energiekontor AG (21.0%).
100%

95%

3 The sector’s EV/FY2 EBTIDA multiple of 7.3x was

slightly higher than the Q4 value of 7.1x. 90%

85%
01/01/2019 15/01/2019 29/01/2019 12/02/2019 26/02/2019 12/03/2019 26/03/2019

Generation and medium and small market

STOXX Europe
Stoxx Europe 600600 TR (total
TR (total return)
return) % % Large market capitalization integrated utility
capitalization integrated assets were valued at a
4 discount compared with the sector’s EV/FY2
Medium and small capitalization integrated utility Gas utility

EBITDA valuations. Generation Renewables

Water and wastewater

Note: EY analysis is based on data sourced from S&P Capital IQ. Please see the appendix for the detailed definitions, the company segment definitions and the company tagging for the valuations analysis

Page 26
 Europe

Valuations and TSR snapshot — Q1 2019 (continued)

Large market capitalization

Q1 integrated
QTD TSR EV/FY2 EBITDA
TSR in % (from 1 January 2019 to 31 March 2019) (At 31 March 2019) • The large market capitalization integrated
returned a quarterly TSR of 9.3%, which was
above the regional index average of 8.4%.
Large market capitalization integrated 9.3% 7.5x
• The EV/FY2EBITDA multiple traded at 7.5x,
Medium and small market capitalization integrated 4.0% 5.0x which was the lowest of all regions (Asia-Pacific
12.1% 9.8x 8.3x; Americas 10.5x).
Gas utility
2.4% 5.7x
Generation
15.6% 9.1x
Renewables
8.4% 8.5x Medium and small market
Water and wastewater
8.4% 7.3x capitalization integrated
EY Europe Utilities Index
• The medium and small market capitalization
integrated segment returned a quarterly TSR of
TSR >20% higher than the regional sector average; EV/FY2 EBITDA >20% discount compared with the regional sector average 4.0%, below the regional index average of 8.4%.
TSR 0% to 20% higher than the regional sector average; EV/FY2 EBITDA between a 0% to 20% discount compared with the regional sector average • The EV/FY2 EBITDA multiple traded at 5.0x,
TSR 0% to 20% lower than the regional sector average; EV/FY2 EBITDA between a 0% to 20% premium compared with the regional sector average less than results recorded in Asia-Pacific and
Americas (10.4x and 9.6x, respectively).
TSR performance >20% lower than the regional sector average; EV/FY2 EBITDA >20% premium compared with the regional sector average

Water and wastewater Renewables Generation Gas utility

• The water and wastewater segment returned a
quarterly TSR of 8.4%, in line with the regional
index average of 8.4%.
• The EV/FY2 EBITDA multiple traded at 8.5x,
which is 16.5% above the regional sector
multiple. It is less than valuations exhibited in
Asia-Pacific and Americas (9.9x and 13.6x,
respectively).
• The renewables segment returned a quarterly
TSR of 15.6%, above the regional index average
of 8.4%.
• The EV/FY2 EBITDA multiple traded at 9.1x,
which is 26% above the regional average. The
valuation is less than those achieved in Asia-
Pacific and Americas (12.5x and 11.7x,
respectively).
• The generation segment returned a quarterly
TSR of 2.4%, below the regional index average
of 8.4%.
• The EV/FY2 EBITDA multiple traded at 5.7x,
less than that of Asia-Pacific and Americas
(7.8x and 8.3x, respectively).
• The gas utility segment returned a quarterly
TSR of 12.1%, above the regional index average
of 8.4%.
• The EV/FY2 EBITDA multiple traded at 9.8x,
34% above the regional average but less than
that of Asia-Pacific and Americas (14.8x and
11.1x, respectively).

Note: EY analysis is based on data sourced from S&P Capital IQ. Please see the appendix for the detailed definitions, the company segment definitions and the company tagging for the valuations analysis.

Page 27
 Europe

M&A outlook and investment hotspots

Utilities focus on decarbonization

US$1.14b •
•
Czech utility CEZ Group has announced plans to shut 1 GW of coal capacity by 2020.
ENGIE has announced that it will invest between US$12.4b and US$13.5b in renewables and behind-the-
meter solutions. The utility plans to add 9 GW of renewables capacity from 2019 to 2021.
green bond launched by Enel to • According to EDP’s strategic plan, more than 70% of the company’s electricity generation by 2022 will be
finance new renewables, sourced from renewables.
transmission and distribution • Enel has announced plans to develop 11.6 GW of renewables capacity by 2021.
networks, and e-mobility projects

“
Increased push for EVs
• The EU has tightened caps on carbon dioxide emissions from cars, setting a 37.5% CO2 reduction target for
2030 compared with the 2021 limit. The move aims to accelerate the development of EVs.
We plan to eliminate any range • During 2019, Scottish Power will expand the EV charging infrastructure in the UK, as part of its plan to
invest US$2.6b in clean energy in the country.
or charging anxiety by building a
• UK-based GRIDSERVE Sustainable Energy, which develops, owns and operates renewable energy projects,
UK-wide network of customer- plans to spend US$1.3b on new EV charging infrastructure in the UK over the next five years.
focused, brand-new Electric
Forecourts that will make it EU at risk to miss 2030 renewables and energy savings goals
easier and cheaper to use an • WindEurope released analysis indicating that Europe’s draft National Energy and Climate Plans are
electric vehicle than a petrol or insufficient to deliver the EU’s 32% renewables target for 2030. The group called for more definitive Plans
supporting renewables growth. These Plans must be finalized by 31 December 2019.
diesel alternative5. • The Coalition for Energy Savings indicated that stronger GDP growth (mainly in Eastern Europe) was putting
Toddington Harper, the EU’s overall nonbinding target to improve its energy efficiency by 32.5% at risk.
Chief Executive Officer, GRIDSERVE
5 https://www.smart-energy.com/industry-sectors/electric-vehicles/plans-for-100-uk-ev-charging-forecourts-unveiled-gridserve/

Page 28
 Europe

EY Europe Transaction Advisory Services P&U contacts

Miles Huq Arnaud De Giovanni John Curtin Grigory Arutunyan

EY Global P&U TAS Leader EY EMEIA P&U TAS Leader EY UK & Ireland (UKI) P&U TAS Leader EY Central, Eastern and Southeastern
Europe and Central Asia (CESA) Region
P&U TAS Leader

+1 410 783 3735 +33 1 55 61 04 18 +44 20 7951 6257 +7 495 641 2941
miles.huq@ey.com arnaud.de.giovanni@fr.ey.com jcurtin@uk.ey.com grigory.s.arutunyan@ru.ey.com

Giacomo Chiavari Andreas Siebel Bruno Swildens Michael Bruhn

EY Mediterranean P&U TAS Leader EY Germany, Switzerland and Austria (GSA) EY Western Europe and Maghreb (WEM) EY Nordics P&U TAS Leader
P&U TAS Leader P&U TAS Leader

+39 027 2212 3090 +49 211 9352 18523 +31 88 40 78776 +45 2529 3135
giacomo.chiavari@it.ey.com andreas.siebel@de.ey.com bruno.jelgerhuis.swildens@nl.ey.com michael.bruhn@dk.ey.com

Page 29
Asia-Pacific
Investors focus on
greenfield renewables
Power transactions and trends Q1 2019
Asia-Pacific
“
Asia-Pacific is feeling the
pressure of slowing
Chinese economic
growth. This, coupled
with continuing
geopolitical tensions,
weighed heavy on
investors this quarter.
However, greenfield
renewable development is
providing growth
opportunities in the
region.
Mile Huq,
EY Global P&U TAS Leader
Page 31
US$4.1b
Transaction highlights
total deal value, a 45% decline from Q4 2018
Deal value and volume fall
• Deal value and volume decreased 45%
quarter-on-quarter, reaching a low of 27
deals totaling US$4.1b.
US$3.6b
Chinese privatization dominates Q1
• The quarter’s largest deal — 70% of deal
value — was China Power New Energy’s
deal value in renewables – 88% of deal value delisting of China Power Clean Energy
Development Company Limited (CP Clean
Energy) from the Hong Kong Stock
Chart 9: Asia-Pacific deal value and volume by segment Exchange.
(announced asset and corporate-level deals, Q1 2017–Q1 2019)
Renewables drive activity
Deal volume (number of deals)
25 60
• Renewables M&A was the only segment to
Deal value (US$b)
20 50 increase in value from Q4 2018, more than
15
40
30
doubling to reach US$3.6b and forming 88%
of deal value. Much of the increase was due
10
20 to the privatization of CP Clean Energy (80%
of all renewables deal value).
5
0
10
0 Continuing investment in generation
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
• Q1 saw six small deals in conventional
Generation Integrated utility Energy services
generation — the highest deal number in this
segment across all regions. Investment is led
Renewables Gas utility Water and wastewater by domestic activity in Greater China (five of
Volume the six deals).
 Asia-Pacific

New solar and wind projects attract investment

Australia’s corporates boost greenfield

Offshore wind accelerating
• The development of offshore wind capacity is
ramping up, with Australia, Japan, China, Korea
and India all announcing projects or in the midst
of tender processes. China’s Jiangsu province
approved 24 offshore wind power projects with
a total capacity of 6.7 GW. In South Korea,
state-owned National Oil Corporation (KNOC)
and Equinor, a Norwegian utility, are exploring
opportunities to develop 200 MW capacity of
commercial floating offshore wind farms.
development
• More large energy users are developing
renewables projects to reduce exposure to price
volatility. Malabar Coal announced plans to build
a 25 MW solar farm, while Gold Fields Australia
signed a contract with UK-based power solution
company Aggreko to build an off-grid renewable
and battery system at a Western Australian mine.
There are rumors that telecommunications giant
Telstra will issue a tender for 300 MW of new
solar and/or wind power in the New South Wales
market to cut its exposure to volatile grid prices.
India focuses on solar
• India has set an ambitious target to achieve
100 GW of solar power by 2022. Development
of capacity is well underway with a number of
solar developments announced this quarter.
Notably, the Solar Energy Corporation of India
Ltd. (SECI) has issued a tender for the
development of a 275 MW of grid-connected
solar PV project in Uttar Pradesh, 1.2 GW in
Madhya Pradesh and 200 MW in Andhra Pradesh
with plans to issue another tender for 1 GW
soon.

“
Executing an MOU with Equinor will become a critical opportunity
that will advance to practical steps of floating offshore wind in
Korea. We plan to actively focus on progress and de-risking studies,
including feasibility studies in collaboration with Equinor6.
Jae-Heon Shim,
Senior Vice President, KNOC

6 https://www.power-technology.com/news/knoc-equinor-south-korea/

Page 32
 Asia-Pacific

Limited M&A activity

Asia-Pacific regional capital flows — Q1 2019 (US$b)

83% of total deal value 93% of deal value

Greater
China
(US$3.4b) was (US$3.8b) was domestic.
3.5 concentrated in Greater
South China.
3.5 Korea
0.2

“
0.2

Greater China continues to be the biggest investor in Asia-

Pacific, investing both domestically and internationally.
Thailand
India
0.1
While the outbound agenda is significant, we are seeing
0.3 increasing appetite for domestic M&A.
0.3 0.1
Miles Huq,
EY Global P&U TAS Leader

Top investor countries/regions

Greater China UK South Korea Thailand

Note: Numbers may not add to total due to rounding.

Page 33
 Asia-Pacific

Top five Asia-Pacific deals — Q1 2019

Announcement Target Target country/ Bidder Deal value Bidder rationale Segment
Investment in India’s
date bidder country (US$b)
solar sector is on the
Aligns with bidder’s
strategy to expand its rise.
China Power Clean
Greater China/ China Power International 2.9 renewables portfolio
28 March Energy Development Co. Renewables
Greater China Holding Limited and delist the target
Ltd. (73.58% stake)
company from the Hong
Kong Stock Exchange
CDC Group plc; National
Furthers bidder’s strategy
Ayana Renewable Power Investment and
1 March India/UK 0.3 to expand into India’s Renewables
Private Limited Infrastructure Fund (NIIF);
renewable energy market
EverSource Capital Group
Youngduk Wind Power
Samtan Co., Ltd.; Shinhan Supports investors’ plans
Co., Ltd.; Yeong Yang South Korea/ South
22 February Alternative Investment 0.2 to expand into wind Renewables
Wind Power Korea
Management Inc. energy
Corporation
Qinhuangdao Qinre
Electric Power Co., Ltd. Enables Jionto Energy
(40% stake); Hebei Greater China/ Jointo Energy Investment Investment to consolidate
7 March 0.2 Generation
Zhanghewan Storage Greater China Co., Ltd. Hebei market share and enhance
Power Generation Co., power generation capacity
Ltd. (45% stake)
Improves the financing
TBEA Xinjiang New Bank of Communications capacities of Xinjiang and
Greater China/
20 March Energy Co., Ltd. Financial Asset 0.1 supports the development Renewables
Greater China
(15.02% stake) Investment Co., Ltd. and operation of wind and
solar projects

Note: All deals are announced deals, and the values indicated are disclosed enterprise values comprised of equity and debt components.

Page 34
 Asia-Pacific

Valuations and TSR snapshot — Q1 2019

Return over time — from base date

The EY Asia-Pacific Utilities Index recorded a Chart 10: Total shareholder return by segment
TSR of 8.2%, underperforming the regional (from 1 January 2019 to 31 March 2019)
1 benchmark Nikkei 225, which recorded a TSR
of 9.6%. 145%

135%

Renewables was the highest performing 125%

segment, outperforming the market with a QTD
2 return of 27.6%, attributed to the high TSR of
115%
Ning Xia Yin Xing Energy and CECEP Wind-
power Corporation.
105%

95%
The EV/FY2 EBITDA of the sector traded
3 slightly downward at 10.3x, compared with 85%
11.7x in Q4 2018. 01/01/2019 15/01/2019 29/01/2019 12/02/2019 26/02/2019 12/03/2019 26/03/2019

Nikkei 225 TR (total return) % Large market capitalization integrated utility

Generation delivered a negative QTD return Medium and small capitalization integrated utility Gas utility
4 with a TSR of -0.62%, the worst performing Generation
Water and wastewater
Renewables
segment across all regions.

Note: Please see the appendix for information on the company assignment to each segment.

Page 35
 Asia-Pacific

Valuations and TSR snapshot — Q1 2019 (continued)

Large market capitalization

Q1 integrated
QTD TSR EV/FY2 EBITDA
• The large market capitalization integrated
TSR in % (from 1 January 2019 to 31 March 2019) (At 31 March 2019)
returned a quarterly TSR of 2.2%, which is
below the regional index average of 8.2%.
Large market capitalization integrated 2.2% 8.3x
• The EV/FY2 EBITDA multiple traded at 8.3x,
6.3% 10.4x which is 19% below the average regional sector
Medium and small market capitalization integrated
multiple and greater than that of Europe but
8.7% 14.8x less than Americas (7.5x and 10.5x,
Gas utility
-0.6% 7.8x respectively).
Generation
12.5x
Renewables 27.6% Medium and small market
Water and wastewater 14.1% 9.9x capitalization integrated
EY Asia-Pacific Utilities Index 8.2% 10.3x • The medium and small market capitalization
integrated segment returned a quarterly TSR of
6.3%, below the regional index average of 8.2%.
TSR >20% higher than the regional sector average; EV/FY2 EBITDA >20% discount compared with the regional sector average
• The EV/FY2 EBITDA multiple traded at 10.4x,
TSR 0% to 20% higher than the regional sector average; EV/FY2 EBITDA between a 0% to 20% discount compared with the regional sector average which is 1% above the average regional sector
TSR 0% to 20% lower than the regional sector average; EV/FY2 EBITDA between a 0% to 20% premium compared with the regional sector average multiple but greater than that of Europe and
Americas (5.0x and 9.6x, respectively).
TSR performance >20% lower than the regional sector average; EV/FY2 EBITDA >20% premium compared with the regional sector average

Water and wastewater Renewables Generation Gas utility

• The water and wastewater segment returned a
quarterly TSR of 14.1%, above the regional
index average of 8.2%.
• The EV/FY2 EBITDA multiple traded at 9.9x,
which is below the average regional sector
multiple. The result is greater than that of
Europe (8.5x) but less than that of Americas
(13.6x).
• Renewables assets returned a quarterly TSR of
27.6%, which is above the regional index
average of 8.2%.
• The EV/FY2 EBITDA multiple traded at 12.5x,
which is 21% above the average regional sector
multiple and greater than that of Europe and
Americas (9.1x and 11.7x, respectively).
• The generation assets returned a quarterly TSR
of -0.6%, below the regional index average of
8.2%.
• The EV/FY2 EBITDA multiple traded at 7.8x,
which is 25% below the average regional sector
multiple. The result is greater than that of
Europe (5.7x) but less than that achieved in
Americas (8.3x).
• Gas utility assets returned a quarterly TSR of
8.7%, which is above the regional index average
of 8.2%.
• The EV/FY2 EBITDA multiple traded at 14.8x,
which is 43% above the average regional sector
multiple and greater than the results of Europe
and Americas (9.8x and 11.1x, respectively).

Note: EY analysis is based on data sourced from S&P Capital IQ. Please see the appendix for the detailed definitions, the company segment definitions and the company tagging for the valuations analysis.

Page 36
 Asia-Pacific

M&A outlook and investment hotspots

Bangladesh attracts solar investment

US$9.2b • Bangladesh has become an attractive investment destination, particularly for solar projects. The
country plans to add 2,500 MW capacity each year, with a target of 10% renewables by 2021. In
this quarter alone, more than 150 MW of new solar projects and tenders have been announced.
The World Bank has approved US$185m in credit to facilitate the development of an additional
310 MW renewable energy generation capacity to meet growing demand for electricity, which is
of offshore wind tenders to be also encouraging private investment.
launched by Japan in 2019

Thailand will allow customers to export to the grid

• Thai policymakers are currently consulting around how householders with new solar PV

“
installations can export excess power to the grid, with a feed-in tariff for up to 100 MW of
capacity. The project is in line with the Power Development Plan that targets 12.7 GW of solar by
2037.
We have a number of charging stations
in the central business district, but
residential charging stations will mean Electric vehicle (EV) pilots aim to boost adoption
EVs could be a practical option for • Panasonic is collaborating with BSES Yamuna Power Limited to set up an EV charging station at
its New Delhi head office to study charging behavior and patterns, real-time charging data, app-
Wellingtonians wanting to make the based controls and automated payment mechanisms. New Zealand’s Wellington City Council
switch to them7. announced plans to install its first EV charging stations in residential areas, enabling people
without access to household parking to charge EVs overnight.
Justin Lester,
Mayor, Wellington City

7 https://wellington.govt.nz/your-council/news/2019/03/15-ev-chargers-for-the-suburbs.

Page 37
 Asia-Pacific

EY Asia-Pacific P&U Transaction Advisory Services contacts

Miles Huq Nick Cardno Gilles Pascual Alex Zhu

EY Global P&U TAS Leader EY Oceania P&U TAS Leader EY ASEAN P&U TAS Leader EY Greater China P&U TAS Leader

+1 410 783 3735 +61 2 9248 4817 +65 6309 6208 +86 10 5815 3891
miles.huq@ey.com nick.cardno@au.ey.com gilles.pascual@sg.ey.com alex.zhu@cn.ey.com

Somesh Kumar Yo Takehana Bum Choong Kim

EY India P&U TAS Leader EY Japan P&U TAS Leader EY Korea P&U TAS Leader

+91 11 6671 8270 +81 3 4582 6623 +82 2 3787 4107

somesh.kumar@in.ey.com yo.takehana@jp.ey.com bum-choong.kim@kr.ey.com

Page 38
Africa and the
Middle East
Governments focus on
renewable energy while
financial sponsors invest
Power transactions and trends Q1 2019
Africa and the Middle East

Chart 11: Africa and the Middle East smart

metering investments (US$b)
Transaction highlights

39% 0.8 0.8

0.9
1.0
1.2 Continued funding of new renewables investment
• The African Development Bank is financing the construction of
renewable power plants across Sub-Saharan Africa with a combined
of electricity in the capacity of 533 MW.
Middle East and North • In January, Voltalia, a French-based energy services company,
Africa to come from solar announced plans to build a 40 MW solar power plant in Western
Kenya.
PV by 2050
2017 2018 2019f 2020f 2021f • Harmony Gold, a South Africa-based mining company, is planning to
build a 30 MW solar power plant to power its operations in Africa.

235.2m
Source: Bloomberg New Energy Finance
• In February, France’s ENGIE began operations of its 100 MW Kathu
solar CSP plus storage plant located in South Africa’s Northern Cape
province.
Chart 12: Africa and the Middle East deal value
smart meters to be (announced asset and corporate-level deals, 2010–Q1 2019) Largest deal of the region in water and wastewater
installed in Africa and • Majis Industrial Services S.A.O.C, an Oman-based, government-owned
7
company, acquired an undisclosed stake in Utico FZC, the UAE-based
the Middle East by 2030 6
company engaged in water treatment and management solutions, for
5
a consideration of US$400m.
4
US$b

3 The Kingdom of Saudi Arabia (KSA) secures record low

2 auction for first wind farm
1
- • KSA’s first wind farm — the 400 MW Dumat Al Jandal farm — will be
2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1 developed by a consortium made up of renewable energy developers
2019 EDF Renewables and Masdar, which were awarded the contract
Year following their record-low bid of 2.13 cents per kWh.
Source: EY analysis based on publicly disclosed data

Page 40
 Africa and the Middle East

Governments seek energy reform and refocus on renewables

“
The Kingdom of Saudi Arabia has set a
clear energy strategy to substantially
40 GW
of solar energy capacity in Saudi Arabia by 2030

increase the share of renewables in its

total energy mix to 10% by 20238.
Mohamed Jameel Al Ramahi, KSA increases renewables target
CEO, Masdar
• After limited activity in 2018, the KSA’s Renewable Energy Project
Development Office (REPDO) has increased its solar energy target from 9.5
GW to nearly 60 GW, including 40 GW of solar PV.

Weak economic conditions drive privatization and
unbundling
• Oman plans to privatize two power companies by selling 70% and
49% stakes in Muscat Electricity Distribution Company and Oman
Electricity Transmission Company, respectively, following weak
economic conditions due to depressed oil prices. The government
has expressions of interest from 25 investors.
• South Africa is considering unbundling state-owned utility Eskom
into three separate units: generation, transmission and distribution.
The utility has faced financial, operational and governance
challenges in recent years.
8 https://masdar.ae/en/news-and-events/news/2019/01/11/11/46/the-edf-renewables-masdar-consortium-awarded-the-dumat-al-jandal-wind-project-in-saudi-arabia
• The government has followed the successful connection of its first solar IPP in
January with the announcement of several new renewables tenders, including
a 2.6 GW of solar in Makkah, the Dumat Al Jandal wind farm and seven
greenfield solar PV projects with a combined capacity of 1,500 MW.
South Africa moves to boost clean energy
• After a three-year hiatus of the country’s Renewable Energy Independent
Power Producer Procurement Programme (REIPPPP), the end of March saw
the signing of 27 outstanding renewables PPAs.
• This development is expected to lead the way for more renewables projects —
a new round of bidding will be launched later this year with an estimated
program of 1,800 MW capacity.

Page 41
 Africa and the Middle East

Focus on smart grid investments and e-mobility

“
I am so excited to launch this third expedition of the
electric cars. This is an indication of how technology has US$1.68b
evolved in the UAE over the years. The government will
estimated value of the Gulf region’s smart
continue to promote all types of conservation drives in the
country as we look forward towards sustainability9. grid market by 2026
Suhail Mohammed Faraj Al Mazroui,
UAE Minister of Energy & Industry

More investment in Middle East smart grid

Increasing focus on e-mobility solutions
• Dubai is incentivizing the use of electric vehicles (EVs) through
initiatives, including free public charging, free vehicle registrations and
dedicated parking locations.
• The Emirates Authority for Standardization and Metrology has
developed technical regulations for hydrogen cell vehicles, making the
UAE the first of the Gulf Cooperation Council to do so.
• Shell South Africa will launch its first EV charging stations this year
across its retail network in South Africa.
• Nissan Motor Co. plans to partner with Egyptian authorities to develop
the country’s EV ecosystem.
infrastructure
• Nokia signed a memorandum of understanding (MoU) with Saudi
Electricity Company to deploy 10 million smart meters in Saudi Arabia.
• Kuwait’s Ministry of Electricity and Water has issued a request for
procurement for smart meters.
• Dubai Electricity and Water Authority has signed an MoU with Saudi
Aramco to cooperate on energy, research and development, and
smart grids.

9 https://www.khaleejtimes.com/nation/abu-dhabi/twelve-electric-cars-start-2000-km-trip-to-spread-the-green-message

Page 42
 Africa and the Middle East

Top five Africa and the Middle East greenfield investments — Q1 2019

Bidder company/country Target country Project description Segment

Dubai Electricity and Water
UAE Plans to set up a 900 MW solar PV power plant Renewables
Authority/UAE

Emirates Water and Electricity

UAE Plans to build a 2,000 MW solar plant in Dubai Renewables
Company/UAE

Ministry of Finance and Economic Plans to develop solar PV plants with a combined
Ethiopia Renewables
Development/Ethiopia capacity of 800 MW at an investment of US$795m

Oman Power and Water Will invest US$400m to set up a 500 MW solar PV
Oman Renewables
Procurement Company/Oman project

Ministry of Energy, Industry and Plans to build solar projects of 2,600 MW capacity in
Saudi Arabia Renewables
Mineral Resources/Saudi Arabia Makkah region

Page 43
 Africa and the Middle East
M&A outlook and investment hotspots
US$1.7b
investment in off-grid energy
access in 2018
Page 44
Investment in off-grid energy access will continue to rise
• Investment in off-grid energy access, which includes businesses that sell solar panels
to power lights, cell phones and other household devices, as well as microgrids that
power entire communities, reached almost US$1.7b by the end of 2018, up from almost
zero in 2010.
• A sector traditionally funded by nonprofits has seen the entrance of large strategic
investors, including European utilities, such as ENGIE and EDF; oil and gas majors,
including Shell and Total; and energy technology providers, including Schneider Electric.
Renewables development to accelerate further
• Lebanon has short-listed 28 firms in its tender for a 180 MW solar power project.
• Algeria will issue tenders for a 150 MW solar power project in 2019 to meet growing
electricity demand.
• Nigeria’s University of Benin has launched a tender for a 15 MW solar power project that
includes 5 MW of battery energy storage.
• Qatar plans to launch an energy-focused Islamic bank in late 2019 with a targeted capital
of US$10b to finance both domestic and global energy projects.
 Africa and the Middle East

EY Africa and the Middle East Transaction Advisory Services P&U contacts

Miles Huq David Lloyd

EY Global P&U TAS Leader EY Middle East P&U TAS Leader

+1 410 783 3735 +966 11 215 9852

miles.huq@ey.com david.lloyd@sa.ey.com

Page 45
Appendix
Appendix: Definitions

Company segment definitions

Segment EY definition
Large market capitalization Utilities with market capitalization more than US$10b and engaged in multiple segments of the power value chain —
generation, T&D, and retail or T&D and retail — and utilities that have T&D business and substantial presence in
other segments, as well as from the perspective of revenues
Medium and small market Utilities with market capitalization less than US$10b and engaged in multiple segments of the power value chain —
capitalization generation, T&D, and retail or T&D and retail — and utilities that have T&D business and substantial presence in
other segments, as well as from the perspective of revenues
Gas Utilities that generate the majority of their revenues from downstream gas, including transmission, distribution and
the sale of gas as an energy source
Generation Utilities that generate the majority of their revenues from power production through large centralized
(nonrenewable) sources, including coal, gas, oil, large hydro and nuclear
Renewables Utilities that are engaged in generating power from centralized or distributed renewable energy sources, including
solar, wind and small hydro
Water and wastewater Utilities that manage water and wastewater networks, and engage in the distribution, supply or treatment of water
and wastewater

Page 47
Appendix: Americas

Americas company segment tagging for valuations analysis

Large market capitalization Medium and small market capitalization Gas Renewables
integrated integrated AltaGas Ltd. AES Tietê Energia S.A.
Alliant Energy Corp. Algonquin Power & Utilities Corp. Atmos Energy Corp. Boralex Inc.
Ameren Corp. ALLETE, Inc. Chesapeake Utilities Corp. Brookfield Renewable Partners L.P.
American Electric Power Company, Inc. ATCO Ltd. National Fuel Gas Company Canadian Solar Inc.
Avangrid, Inc. Avista Corp. New Jersey Resources Corp. Clearway Energy, Inc.
CenterPoint Energy, Inc. Black Hills Corp. NiSource Inc. Covanta Holding Corp.
CMS Energy Corp. Canadian Utilities Ltd. Northwest Natural Holding Company CPFL Energias Renováveis S.A.
Consolidated Edison, Inc. Companhia Energética de Brasília - CEB ONE Gas, Inc. Innergex Renewable Energy Inc.
Dominion Energy, Inc. Crius Energy Trust RGC Resources, Inc. NextEra Energy Partners, LP
DTE Energy Company EDP - Energias do Brasil S.A. South Jersey Industries, Inc. Northland Power Inc.
Duke Energy Corp. El Paso Electric Company Southwest Gas Holdings, Inc. Ormat Technologies, Inc.
Edison International Emera Inc. Spire Inc. Pattern Energy Group Inc.
Entergy Corp. Genie Energy Ltd. TransCanada Corp. SunPower Corp.
Evergy, Inc. Hawaiian Electric Industries, Inc. UGI Corp. Sunrun Inc.
Eversource Energy Hydro One Ltd. Valener Inc. TerraForm Power, Inc.
Exelon Corp. Just Energy Group Inc. TransAlta Renewables Inc.
FirstEnergy Corp. Light S.A. Vivint Solar, Inc.
Fortis Inc. MDU Resources Group, Inc.
Generation
Integrated utility in Pennsylvania MGE Energy, Inc. Capital Power Corp.
NextEra Energy, Inc. NorthWestern Corp. CESP - Companhia Energética de São Paulo Water and wastewater
NRG Energy, Inc. American States Water Company
Pinnacle West Capital Corp. OGE Energy Corp.
The AES Corp. American Water Works Company, Inc.
Public Service Enterprise Group Inc. Otter Tail Corp.
TransAlta Corp. Aqua America, Inc.
Sempra Energy PG&E Corp.
Vistra Energy Corp. Artesian Resources Corp.
Southern Company PNM Resources, Inc.
California Water Service Group
WEC Energy Group, Inc. Portland General Electric Company
Connecticut Water Service, Inc.
Xcel Energy Inc. SCANA Corp.
Consolidated Water Co. Ltd.
Spark Energy, Inc.
Middlesex Water Company
Unitil Corp.
SJW Group
Vectren Corp.
The York Water Company

Page 48
Appendix: Europe

Europe company segment tagging for valuations analysis

Large market capitalization Medium and small market capitalization Gas Renewables
integrated integrated AS Latvijas Gaze aventron AG
CEZ, a. s. ACCIONA, S.A. Enagás, S.A. EDP Renováveis, S.A.
E.ON SE Alpiq Holding AG Hera S.p.A. Energiekontor AG
EDP - Energias de Portugal, S.A. Centrica plc Italgas S.p.A. Falck Renewables S.p.A.
Electricité de France S.A. Drax Group plc Naturgy Energy Group, S.A. FUTUREN SA
Endesa, S.A. Elia System Operator SA Rubis Ørsted A/S
Enel SpA EnBW Energie Baden-Württemberg AG Snam S.p.A. Terna Energy Societe Anonyme Commercial
ENGIE SA Enea S.A. Technical Company S.A.
Fortum Oyj EVN AG
Iberdrola, S.A. PGE Polska Grupa Energetyczna S.A. Generation
innogy SE Public Joint Stock Company Inter RAO UES A2A S.p.A. Water and wastewater
National Grid plc Public Joint-Stock Company Moscow United Irkutsk Public Joint Stock Company of Pennon Group Plc
Red Eléctrica Corporación, S.A. Electric Grid Company Energetics and Electrification Severn Trent Plc
RWE Aktiengesellschaft Public Power Corp. S.A. Public Joint Stock Company Donbasenergo SUEZ SA
SSE plc Rosseti, Public Joint Stock Company Public Joint-Stock Company Federal Hydro- United Utilities Group PLC
TAURON Polska Energia S.A. Generating Company - RusHydro Veolia Environnement S.A.
Terna - Rete Elettrica Nazionale Società per
Azioni Uniper SE
VERBUND AG

Page 49
Appendix: Asia-Pacific
Asia-Pacific company segment tagging for valuations analysis
Large market capitalization
integrated
Chubu Electric Power Company, Inc.
CK Infrastructure Holdings Ltd.
CLP Holdings Ltd.
Korea Electric Power Corp.
Power Assets Holdings Ltd.
Power Grid Corp. of India Ltd.
Tenaga Nasional Berhad
The Kansai Electric Power Company, Inc.
Tokyo Electric Power Company Holdings, Inc
Page 50
Medium and small market capitalization Gas Renewables
integrated APA Group CECEP Wind-power Corp. Co., Ltd.
AGL Energy Ltd. China Gas Holdings Ltd. China Datang Corp. Renewable Power Co.,
AusNet Services Ltd. ENN Energy Holdings Ltd. Ltd.
BKW AG Korea Gas Corporation Huaneng Renewables Corp. Ltd.
CESC Ltd. Osaka Gas Co., Ltd. Kong Sun Holdings Ltd.
Contact Energy Ltd. PT Perusahaan Gas Negara (Persero) Tbk Meridian Energy Ltd.
Electric Power Development Co., Ltd. Shenzhen Gas Corp. Ltd. Ning Xia Yin Xing Energy Co., Ltd.
ERM Power Ltd. The Hong Kong and China Gas Company Ltd.
Genesis Energy Ltd. Toho Gas Co., Ltd. Water and wastewater
HK Electric Investments and HK Electric Tokyo Gas Co., Ltd. Beijing Enterprises Water Group Ltd.
Investments Ltd.
Beijing Water Business Doctor Co., Ltd.
Hokkaido Electric Power Company, Inc.
Hokuriku Electric Power Company Generation Binh Duong Water - Environment Joint Stock
Beijing Jingneng Clean Energy Co., Ltd. Company
JSW Energy Ltd.
China Power International Development Ltd. China Water Affairs Group Ltd.
Kyushu Electric Power Company, Inc.
Datang International Power Generation Co., Chongqing Water Group Co., Ltd.
Origin Energy Ltd.
Ltd. Daiseki Co., Ltd.
Ratchaburi Electricity Generating Holding
First Philippine Holdings Corp. Eastern Water Resources Development and
Public Company Ltd.
GuiZhou QianYuan Power Co., Ltd. Management Public Company Ltd.
Shikoku Electric Power Company, Inc.
Huadian Power International Corp. Ltd. Guangdong Investment Ltd.
The Chugoku Electric Power Co., Inc.
Huaneng Power International, Inc. Luenmei Quantum Co., Ltd.
The Tata Power Company Ltd.
Mercury NZ Ltd. Manila Water Company, Inc.
Tohoku Electric Power Company, Inc.
NHPC Ltd. SIIC Environment Holdings Ltd.
Trustpower Ltd.
NTPC Ltd. TTW Public Company Ltd.
Vector Ltd.
OPG Power Ventures PLC Tus-Sound Environmental Resources Co., Ltd.
Reliance Power Ltd. VA Tech Wabag Ltd.
Zhejiang Zheneng Electric Power Co., Ltd. WHA Utilities and Power Public Company Ltd.
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