On 3rd November 2021, the world’s fourth-largest renewable energy producer, EDP Renewables (EDPR), agreed to acquire a majority stake in the Singapore-based energy system developer Sunseap for a total of 810 million USD. The deal will result in EDPR owning at least 87.4% of shareholdings, which could potentially increase to 91.4%, depending on the willingness of existing shareholders to sell. A substantial portion of the stake will be composed of shares bought from Banpu, a Thai energy firm that currently holds 47.5% of shares, and Temaseck holdings, a Singapore-based state investor. The central aim of this union is to provide EDPR with a platform to accelerate growth in the Asia-Pacific region and provide opportunities for collaboration between both companies, who have a mutual interest in increasing the capabilities of renewable energy generation and storage.
EDPR is the renewables branch of the Portuguese utility giant Energias de Portugal, which owns 75% of the company, and has a current market capitalisation of 21.32 billion GBP. They have a renewable energy portfolio with a total capacity of 15.8 Gigawatts (GW) spread across 17 markets in Europe, the United States and Brazil, with individual capacities of 7.8 GW, 6.3 GW and 1.7 GW, respectively.
Sunseap is a private company that focuses on the development of solar energy systems. They operate across the entire lifecycle of solar-powered energy resources, from production to implementation. Specifically, they build, own and manage their models for a range of different environments like rooftops and ground-mounted utilities. They are also renowned for their ability to harness solar power on large water bodies. This is demonstrated through their 5 Megawatt offshore floating photovoltaic (PV) system in the straits of Johor, which is one of the largest floating solar facilities on seawater in the world. They are active in 9 markets in the Asia-Pacific region (Singapore, Vietnam, Malaysia, Indonesia, Thailand, Cambodia, China, Taiwan and Japan) with a portfolio that produces 5.5 Gigawatts of solar-powered renewable energy every year.
EDPR’s eagerness to establish a network in the Asia-Pacific (APAC) stems from the fact that the region has one of the largest growth potentials for the renewables market. It is inhabited by 4.4 billion people, and experiences ever-rising power demands due to rapid urbanisation, industrialisation and a growing population. The power market in this region generates more than half of the world’s demand and is heavily reliant on non-renewable resources. Due to international efforts to transition to net-zero states, countries like China, South Korea and Japan have pledged to fulfil this promise by 2060. This has resulted in a rapid increase in the planning of renewable projects, and APAC accounts for 55% of all planned renewable resource additions globally, with solar power representing 65% of these plans. EDPR believes that a prominent solar power developer like Sunseap will be at the forefront of delivering these resources.
This acquisition falls within EDPR’s commitment to spending 22 billion USD on renewable investments by 2025 to “complement [their] portfolio globally”, as stated by Miguel Stilwell d’Andrade, CEO of EDP and EDPR. With the renewables industry predicted to grow by 200GW per year, EDPR has strategically placed itself in the markets that are forecasted to grow 75% by the end of this decade. Their commitment to this region continues to grow, highlighted by their recent entry into Vietnam through an agreement with Trina Solar, the world’s leading PV and smart energy total solution provider. This brings their total capacity in this region to 0.5GW and their global capacity to 16.2GW.
EDPR shares have experienced constant and unprecedented growth since the confirmation of Sunseap’s acquisition in July 2021, achieving a high of 26.40 GBP per share compared to 16.02 GBP a year ago. However, the implementation of solar power is threatened by other carbon-neutral resources that can produce a greater capacity of energy and are less dependent on weather conditions. An example of this is nuclear energy, which produces minimal carbon emissions and an extremely high yield of power at all times of the day. The limiting factor for nuclear energy is the cost of building and maintaining the sites, but if technological advancements reduce the running costs, we could see a reduction in weather-dependent renewables, although this is not the case for now.
By Paul Brown
Sector Head: Hortense Comon