Last month, a major power outage left large parts of Europe in the dark. It was one of the biggest blackouts in recent memory, and although the exact cause is still unknown, it’s a strong reminder of the urgent need to continue investing in a resilient energy infrastructure.
Renewables are at the heart of this conversation. They currently make up around 39% of the energy mix in Central and Eastern Europe (CEE) and their role is growing fast. As the energy landscape shifts, we’re seeing big changes in how renewable energy deals are being made. New technologies, changing regulations, and a need for increased energy storage are all driving this momentum.
To explore this further, M&A Community and Ideals hosted senior experts from energy and finance in Vienna. Speakers included Werner Trabesinger of D.Trading, Nazar Holovchak of Greenvolt, Roman Bolyukh and Dumitru Gumenita of Raiffeisen Bank International, and Karishma Merchant of Forvis Mazars.
Among the topics covered at the event, the speakers discussed four trends that are driving renewables M&A activity in the region and shared advice to help investors stay ahead.
1. Cannibalization: The invisible squeeze on merchant assets
CEE has huge potential for increasing the share of renewables in its energy mix, with one think tank suggesting a target of 63% renewable energy by 2030.
Investment in wind and solar is accelerating, but as more projects come online – often competing for the same grid access, subsidies and market demand – they are eating into each other’s revenues.
This trend is known as the “cannibalization effect”, where the simultaneous generation of wind and solar power during peak production times depresses wholesale electricity prices, reducing revenues for these energy producers.
This has pushed the power purchase agreement (PPA) breakeven price – the price needed to cover energy producers’ costs – down to about 56% of the baseload price.
2. PPAs and batteries reduce market risk
In response to cannibalization, corporate PPAs are becoming the backbone of renewable energy financing. They allow developers to swap market risk for credit risk by locking in long-term contracts with buyers. This means they avoid exposure to volatile prices and costly hedging. An example is the $1.5 billion Revolution Wind project in the US, which is financed through PPAs with Rhode Island and Connecticut, providing revenue certainty and support financing.
An equally powerful strategy is the colocalization of battery energy storage systems (BESS) with wind or solar assets. These batteries store energy during low-price periods and sell when prices peak, boosting returns. For example, a solar PV plant combined with BESS and using smart strategies to optimize energy sales could boost its revenue by up to 25% compared to a standalone solar plant. Colocalization also reduces imbalance costs and offers valuable grid flexibility – benefits that will only grow as renewables scale.
Colocalization is also driving strong investment in BESS more broadly. In 2023, 227 storage M&A deals were announced globally – up 15.8% from 2022 – with a total value of US$24.1 billion, nearly triple the previous year. The trend is continuing in 2025, with major transactions including CIP’s sale of a 50% stake in a 500MW Scottish project to AXA, and LG Energy Solution’s US$2 billion acquisition of battery assets from its GM joint venture.
3. Forward‑sale structures: Stretching development capital
Traditional sale‑and‑purchase agreements (SPAs) and ready‑to‑build (RTB) models still dominate the CEE M&A landscape, but forward‑sale frameworks are rapidly gaining prominence. This is where an investor pays 10%-30% of the project cost upfront when signing a preliminary PPA, with the remainder due at commercial operation date.
These transactions offer strategic benefits to sellers. The early monetization of assets through upfront payments can support project financing and improve access to loans, while liability is partially mitigated through buyer-obtained insurance. But they retain responsibility for development risks, face potential cost overruns, and risk buyers withdrawing if the project conditions shift.
On the investor side, the advantages include early access to assets, construction risks being covered by the seller, and the ability to gain interim project control. The phased due diligence process also allows for flexibility.
But these deals come with added complexity, capital lock-up and delayed closing until the project reaches commercial operation, which puts timelines and budgets at risk.
4. ESG premiums: Governance as a value lever
ESG credentials are increasingly driving deal value. Forvis Mazars’ analysis of 10 European district heating M&A deals found that investors consistently placed a higher value on companies with lower carbon emissions. This shows that ESG performance, particularly around carbon intensity, is translating directly into better pricing for assets.
For valuers, key questions include: How significant are ESG factors in this particular sub-sector? Are there ESG risks or red flags tied to the asset? And is there a measurable ESG premium that could influence the valuation?
Environmental risk, regulatory compliance and community impact have always been part of the assessment process. What’s changed is the level of visibility and investor expectation.
Today, ESG isn’t just a valuation consideration, but a liquidity driver. Stronger ESG performance can make an asset more attractive and marketable, expanding the pool of potential buyers and improving deal terms.
The road ahead for CEE renewables M&A
The CEE renewables M&A market is entering a new era, marked by hybrid financing models and innovation in energy storage. Successful developers and investors will be those who translate market insights into actionable strategies, such as predicting solar oversupply patterns, optimizing energy storage, and embedding ESG performance directly into deal value.
In doing so, they’ll shape more profitable, sustainable projects that align with evolving market demands and investor expectations.
