Energy Transition – A driving force for M&A in 2024

Angela Tooley 01 Feb 2024
Written by Angela Tooley
M&A Strategy and Commercial

Decentralisation, decarbonisation, and digitalisation are driving a major transformation in energy. As suppliers make the shift to a greener future, new M&A trends are emerging, posing the question - how can dealmakers maximise this opportunity?

In this blog, we demonstrate the importance of robust M&A processes, sharing insight from our experiences in recent transactions, while exploring the full potential for activity in today’s market.

How are energy suppliers managing the transition?

Today’s tech centred world is increasing electricity consumption. The degasification of transport and heating, through the growth of electric vehicles and heat pumps, is adding to the burden on generation, transmission and distribution.

While consumers have a responsibility to improve their energy efficiency, the system also needs improvements in agility, flexibility, and collaboration – backed by accessibility to high-quality data. Achieving this requires significant change in policy, partnerships, pricing, investment, and of course, consumer behaviour.

The industry’s key players are helping to build more sustainable and secure energy systems on a global scale. They’re driving changes in technology and behaviour, as shown by challenger innovations in renewables, battery storage and Energy as a Service (EaaS). This is forcing some energy companies to think beyond the one-size fits all model.

Octopus Energy, one of the market’s most well-known disruptors, launched in 2016 with a vision of using technology to make the green revolution affordable, while transforming customer experience. Alongside organic growth through customer book acquisitions (from Bulb, Shell and ENGIE UK), Octopus have diversified into the broader energy market through Kraken Technologies and Octopus Electric Vehicles.

The energy sector is rapidly becoming a smart, integrated system - better equipped to handle changes in supply and demand, while offering enhanced, personalised features to customers.

Emerging tech and cloud-based solutions are enhancing asset performance, supporting decarbonisation and revenue growth, by enabling challengers to get a foothold in new downstream activities. This includes offering data driven solutions that help high energy users to achieve their own energy and carbon reduction plans. We’re seeing this through the rollout of intelligent networks, smart metering, microgrids (such as those common in Scandinavia) and improvements in flexible load options.

To survive and thrive, incumbents and challengers will need to continuously revisit portfolios, creating new value streams and routes to market, while making the shift to decarbonisation. Success will depend on their ability to shape these strategies around organisational strengths and market positioning.

How will energy-related M&A grow in 2024?

Energy transition and security of supply are dominating M&A activity. We’ve seen this trend grow over a number of years, with total investment in UK cleantech reaching £2.8bn in 2022.

Areas that are dominating investment include:


Investors continue to direct large volumes of capital into greenfield and brownfield projects, across the four primary UK renewable sources of wind, solar, hydroelectric, and bioenergy.

While hydrogen and nuclear are equally abundant low carbon energy sources, they’re more political, contentious, and require large-scale investment.

The hydrogen technology sector is already of strategic importance to a diverse group of venture and corporate investors, including BGF Growth Capital, Parkwalk and M&G Investments.

Services to support the operation of renewable assets are also gaining traction. Boston Energy, a technical services provider to the wind energy industry, received investment from LDC in 2023, which will enable it to take advantage of opportunities to grow its core markets globally, and support the transition to a clean energy economy.


There’s a need for better energy storage and distribution infrastructure, especially in areas such as battery and hydrogen. This is a key enabler in renewable suppliers responding to grid electricity demands, and is growing in tandem with e-mobility.

Battery storage continues to be an attractive market for PE. Gresham House Energy Storage Fund (GRID) invests in a portfolio of utility-scale operational battery energy storage systems in the UK.

Micro-grids and small-scale renewables

We’re seeing evidence of movement towards a consumer-driven energy supply chain, where energy is consumed close to the point of generation. However, investment is required in grid availability, flexibility, and robust security solutions to protect a decentralised supply chain, and operate a Microgrid As A Service market.

Some of the key players investing in the Microgrid As A Service market globally are Eaton Corp, Siemens, and Carlyle Group.

Energy as a Service (EaaS)

Decentralised markets are adopting new, SMART digital models for trading energy and managed services. As a result, consumers are gaining greater control over costs and usage, based on availability and value.

One of the early investments to be announced in 2024 was a funding package to IDenteq from the Midlands Engine Investment Fund managed by Midven, part of Future Planet Capital Group. The investment will enable it to diversify, enter new markets, and recruit key hires.


Despite the shift in policy regarding ending the sale of petrol and diesel vehicles, there is continued investor interest in e-mobility, especially around infrastructure and the development of hydrogen fuel cell technology.

Alongside market giants such as Airbus, Samsung, Google and Goldman Sachs, e-mobility continues to attract private equity, as seen with Apollo, Brookfield, and Puma Investments.

Who will be 2024’s dealmakers?

Energy is highly regulated, and capital/asset intensive. Previously, it offered limited appeal for private equity and venture funds who typically have shorter investment lifecycles.

However, the emergence of disruptors and innovators across the energy transition value chain is creating investment opportunities that offer accelerated returns. The most successful have clear strategies for ESG, with investment funds enabling them to focus on niche sectors or competencies that could create value across their portfolio.

35% of active PE/VC’s have participated in cleantech with Par Equity, SFC Capital, and BGF Growth Capital amongst those most active – all demonstrating clear strategies.

Alongside this, M&A is helping to shape and accelerate the deployment of strategies for corporates in the sector and its adjacent markets.

Business leaders are using M&A as an essential lever of value creation, creating more diversified energy and power generation companies with a greater global presence. Many of the large players have corporate venture teams, specifically focussed on identifying and investing in early-stage, proven renewable and digital assets.

Tougher economic conditions, and a need to remain profitable during the energy transition, are pushing businesses to reconfigure their operations, rationalise portfolios and divest of inefficient or non-core assets. The cash generated is then re-invested in core assets or decarbonisation projects.

This is driving an increase in carveouts, which will offer dealmakers a new pipeline of deal prospects. Accelerated growth opportunities emerge as a result, as the newly formed standalone companies increase their agility, and ability, to respond to market opportunities.

Whether forming a standalone newco or selling the divested asset to a corporate entity, carve-out planning needs to be undertaken before and alongside due-diligence. This ensures:

  • The business can continue to operate and serve its customers from day one
  • All standalone and stranded costs have been considered, and
  • Management have the vison, entrepreneurial competences, and capabilities to realise the new potential

Correla was created by Xoserve, as an independently owned business to fuel innovation in and beyond the gas market. It was acquired by NorthEdge in 2021, enabling them to grow the core business, and also acquire CloudKB for diversification into alternative energy markets.

In a recent PwC survey, 46% of energy leaders reported they’re planning for acquisition or divestment in the next 12-18 months, to help achieve strategic goals and accelerate investment. There’s also desire for R&D in new areas aligned to decarbonisation, including carbon capture and renewables, or to refocus portfolios on core assets.

Shell is using M&A to transition their business model, having made a reported 35 acquisitions valued at over $154B across Enterprise Tech, Energy Storage and Renewables. Most recently, this includes Daystar Power, Nature Energy, MIDEL and MIVOLT. Alongside this, Shell announced they would sell their domestic energy business in the UK and Germany to Octopus.

Additionally, mid-market consolidation of complimentary providers will help to accelerate the commercial sustainability and growth of transition focussed businesses. They’ll benefit from market penetration by strengthening routes to market, growing customer revenues, and offering complimentary products or services. This is all alongside operational efficiencies gained from leveraging shared capabilities and synergies.

As market entrants continue to shape their asset portfolios to align with business and zero carbon strategies, we’re seeing an increase in the number and value of M&A opportunities globally. Consequently, buyers are competing for innovative scale-up businesses that offer proven technologies, economies of scale, and new routes to market.

This is evident in valuations. For example, the difference between high and low performers by EBITDA multiples of energy retailers has increased from around 1.0 to 1.5 at the beginning of the decade, now reaching 2.5 to 4.5.

Maximising opportunities – What next for M&A processes?

Although the stabilisation of wholesale markets and inflation is a cause for optimism, the energy sector remains a complex landscape.

2024 presents a challenging political environment, with a record number of global general elections meaning uncertainty around future subsidies. Also, the sector continues to be under the scrutiny of regulators, driving greater transparency and flexibility for consumers. Furthermore, geopolitical instability in the Middle East and Gulf is creating risks for energy security and wholesale markets.

Internally, the market remains fragmented and continues to rapidly evolve, with many early-stage businesses, which despite having proven technologies, are struggling competitively to secure routes to market and become commercially sustainable.

This has been evident in the UK battery and storage technology sector recently, which has seen a number of administrations and distressed sales, including BritishVolt, AMTE, Volta Trucks, and Aceleran.

Picking a winner can be a risky business for investors. In our experience, targeting and securing the right company, at the right price, comes down to identifying targets that are aligned to your M&A and sustainability strategies.

Robust due diligence must also be leveraged, informed by commercially focussed advisors with sector and zero carbon expertise, who can quickly focus in on material factors. This often includes:

  • Validation of routes to market, pricing strategies, and sales force effectiveness
  • Exposure to, and scenario testing of energy market changes, including wholesale prices, regulation, and consumer behaviour
  • Risk assessment of impact on cash-flows, not just the P&L
  • Quantifiable upside that could be delivered in a post-deal value creation programme

For more information on M&A opportunities in the energy industry, contact Angela Tooley.

Angela Tooley

Head of Private Equity, Real Estate & ESG

Angela specialises in the creation and implementation of growth strategies, as well as supporting clients through special situations, with M&A advisory, restructuring, and crisis management.

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