Energy supply security problems in Central and Eastern Europe can only be solved with significant investment in the renewable energy sector, Jaroslava Korpanec, head of Central and Eastern Europe, energy infrastructure at Actis told PE Hub Europe.
London-headquartered Actis launched an independent clean energy power producer Rezolv Energy in July 2022. In November 2022, Rezolv acquired rights to build and operate a 1,044 MW solar photovoltaic plant in Arad County, Romania from Monsson Group, with the aim to build Europe’s largest solar photovoltaic plant.
“The region is heavily underinvested in energy assets which would lead to decarbonisation of the region as well as establish its independence away from Russian gas supplies,” said Korpanec. “The issue of security of energy supply in the region can only be resolved with significant investment in the renewable energy sector.”
Investments have been “disappointingly” slow, according to Korpanec. Energy prices have come down from their 2022 highs, prompting off-takers to slow down negotiations over power purchase agreements, Korpanec explained. “That is somewhat unfortunate, as the prospect of off-take arrangements are a catalyst for private investors to invest in the energy sector in those countries,” she added. “The volatility has left potential off-takers worrying that they might do a ‘bad deal’ in a temporary ‘high market price’ environment when looked at in hindsight.”
Price discovery
Despite a slowdown, Actis sees increased M&A activity and new opportunities ahead. Korpanec predicted the upcoming activity could comprise distressed assets struggling with an increased debt burden. But these types of assets would be “snapped up relatively quickly” due to the availability of idle capital, she explained. “I do see competition coming back to the market, but I don’t expect a bargain hunter second half,” she added.
Sellers’ expectations are still where they were roughly 18 months ago, according to Korpanec, and a meeting of buyers and sellers’ expectations has not yet been reached. “We are in a period of price discovery,” she added.
Actis will evaluate opportunities around grids, hydrogen and green transition. “If you’re putting a huge number of renewables online, you of course need to invest in strengthening the existing grids,” said Korpanec. For hydrogen, the firm is yet to find the right live opportunity to invest in, but it is working with relevant stakeholders to develop them.
In the segment of green transition, energy efficiency has caught Actis’ eye, due to the “excellent” return on the investments. “It’s a nascent market,” said Korpanec. “Where companies do not want to take on the obligations on green power, you just think of smaller businesses and improving energy efficiency across the board in those businesses.”
Actis will also continue its work with the governments to implement necessary measures to create the right environment for investors in the renewable energy sector, Korpanec said.
“We really need to go on the ground and drive the change in order to facilitate the investments needed,” she added.
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