European green assets are starting to look cheap. That’s the implication of Brookfield’s $1 billion swoop on Banks Renewables, one of the UK’s largest green energy developers. Having largely deployed a $15 billion energy transition-focused fund outside Europe, the Canadian investment giant’s new geographical focus is unlikely to be a one-off.
Strip out the third of the purchase price that’s debt, and Brookfield is paying between $600 million and $700 million for 0.6 gigawatts of operational wind assets and other projects with planning permission. That $1 billion per GW valuation is roughly in line with Orsted’s (ORSTED.CO) $20 billion market capitalisation and its 20 gigawatts of installed or near-installed capacity. Amid a green bubble in early 2021, when Orsted was worth $80 billion, Banks might have fetched way more.
Brookfield’s deal flags one other trend. While Banks is big in onshore wind farms, the bulk of its 3.5 GW pipeline is focused on solar power and battery storage. That reflects how supply chain issues and inflating costs are complicating wind projects. The International Energy Agency last week said in an updated version of its net zero pathway that solar and battery storage would play a bigger near-term role, while wind would be reduced. Brookfield will not be the only one to adjust its sights accordingly. (By George Hay)
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