Project M&A in Q4: Japanese ramp up offshore activity

In the first weeks of the new year it can feel like you're still coming to terms with how much you ate over Christmas. But there's another thing we've been digesting: juicy Q4 deals.

We looked at corporate M&A activity in Monday's Wind Watch analysis piece. This time, we are going to look at the key project M&A deals that happened in wind during the last quarter of 2018. You can see in the table below that there are plenty of stories but, for us, the most interesting has been the appetite of Japanese investors for European offshore wind deals.

Project M&A Deals in Wind in Q4 2018

Japanese appetite for European offshore

Kansai Electric Power, MUFG, Sumitomo and TEPCO-Chubu joint venture Jera all acquired stakes in offshore wind projects in the UK in the last three months of 2018. One key reason
for the increase in their activity can be found in some recent changes in their home country.

Specifically, the Japanese parliament - the Diet - approved in November a long-awaited bill that sets a national framework for the development of offshore wind in the nation. Under this law, the government is poised to identify areas suitable for the development of offshore wind projects and introduce an auction system for the right to build the projects.

This law is set to come into force this year and, for us, would be a step in the right direction because it means that offshore wind projects can finally get underway in Japan.

Charles Yates, managing director of CmY Consultants, which is working on projects in the Asia-Pacific region, told us that Japan is among one of the most exciting emerging offshore wind markets in Asia.

“A number of big Japanese corporations and power companies are investing in offshore wind in Europe and elsewhere and this is in part because so they can build their own expertise. This means that they won’t need European developers in the same way as the Taiwanese do, for example," he told us. In this sense, Japanese investors are now keener than ever to invest in more established markets including the UK.

For those investors, these projects represent an unmissable opportunity to forge alliances with experienced players so that they can gain knowledge and expertise to implement at home. This can only benefit some of the big developments we're now seeing in Japan.

For example, TEPCO is planning to start construction this year on a 1GW offshore wind farm off the coast of Choshi.

If the Japanese government maintains its commitment to support offshore wind, Japan is set to become one of the most promising markets for the sector in the next decade. This means we can should expect to see more offshore project M&A deals by Japanese giants this year.