The UK Energy Services Market is Ripe for Further M&A in 2016
2015 was a stellar year for acquisitions in the UK energy services market. Our deal tracker shows that over 20 notable acquisitions were closed. And it is noteworthy that the acquisitions were not just lead by the utilities and the largest energy services specialists - energy brokers, IT services firms and a real estate management firms were involved too. This means that despite the consolidation the competitive landscape is still pretty complex. The hot question for market participants and investors right now is: will this activity keep pace into 2016?
Whilst some market participants thought consolidation might start to slow down, 2015 became one of the busiest years yet. Energy brokers bought up energy efficiency specialists – Inspired Energy bought STC Energy and Carbon Holdings and Inprova Group bought UES Energy. Power utilities led some significant buyouts – npower acquired energy management software firm RUMM and Centrica bought Panoramic Power. Remote management was the hot technology to acquire – both WEMS and Utilitywise bought up firms with these capabilities.
So can this pace of activity continue into 2016? Our analysis finds that with many of the underlying drivers still in place and a (albeit smaller) number of attractive targets still left, it is highly likely. The two main trends driving M&A activity will be 1) suppliers broadening their capabilities as part of their ambition to provide end-to-end energy services (this is very interesting because doing this well is difficult); and 2) the realization of the value of energy management software and technology applications in delivering energy services at scale. In particular we expect there will be a continuing ‘arms race’ amongst energy services firms to acquire or develop technology platforms that allow better data capture, analytics and remote energy management capabilities.
The pressure is now on firms considering a strategic takeover in the UK market to clarify their acquisition strategy, given many of the independent energy services firms and technology specialists are getting snapped up fast.
To hear more about the latest activity in the UK Energy Services market, attend our upcoming summit Getting Value from Investments In Energy Innovation. During this one day event held in London on 11 February 2016, we will provide insights across topics such the latest developments across energy management software and BMS. Please register here.