Extraordinary complex situation, challenges us to be more supportive with our clients and look toward the future
COVID-19 has rapidly spread, affecting almost all countries worldwide. Latest economic consensus have shown a general and significant GDP drop, especially relevant in those markets highly dependent on external demand and/or labor-intensive sectors, like the Spanish market. As a result of the health crisis, Government has declared the alarm status, which has a wide variety of implications, many of them impacting the power sector:
• Economy lockdown has led to a relevant decrease in power demand. Combined with the commodities low-trend price observed during the weeks previous to COVID-19 crash, have resulted in historical wholesale electricity low prices.
• Pool and future markets low-price scenario are putting a lot of pressure on off-takers, who are showing a downward trend in PPA prices.
• Delay in the administrative procedures. This has an immediate impact on the development process and construction schedules for renewable energy projects affecting economic projections.
• Financing of renewable energy projects is going through an uncertainty situation which may postpone financial close but also might force financial institutions to revisit their terms and conditions.
• Renewable energy operating projects may face working capital stress situations driven by current retribution parameters as they were calculated considering a complete different pool price scenario compared to existing one.
All the above shows an extraordinary complex situation which challenges renewable energy stakeholders to move fast in order to enhance their business strategy. From Vector Cuatro, we have performed a deep dive on key drivers to provide our clients with a continuous support. Our closeness to the market through a strong network together with our wide in-house expertise, allows us to have 360 picture and enable us to become a reliable partner in the renewable energy industry.
Our M&A and Financial Advisory team is continuously monitoring market updates, factoring any input to adapt opportunity assessment. We are especially active in M&A transactions, on the sell-side helping our clients in maximizing asset value and on the buy-side advising on valuation and structuring to optimize return to shareholders.
Do not hesitate to get in touch with our team requiring any kind of support. Our M&A and Financial Advisory team would be more than happy to support you whatever your concern may be.