Renewable energy valuations have de-rated significantly over the past few years. In some cases, we see the share prices of independent power producers (IPPs) trading at or near the value of operating assets, with little-to-no value ascribed to pipeline developments.¹ 

A recent flurry of private equity takeovers of listed IPPs indicates these long-term investors are looking through short-term factors to acquire renewable portfolios on terms they deem favourable for assets with relatively secure, long duration cashflows.  

Source: Impax research / Bloomberg / BTIG / NBF, April 2025 
* Last 12 months. EV/EBITDA = The ratio of enterprise value (EV) to earnings before interest, tax, depreciation and amortisation (EBITDA) 
** Listed renewable independent power producers (IPPs) that have been taken private in deals with an EV exceeding US$1bn since December 2023. Note that OX2 is a developer of renewable energy assets, rather than owner and operator of facilities. 

Headwinds facing renewables stocks  

The policy and macroeconomic tailwinds that blew hard behind the fast-expanding renewables sector a few years ago have since been subsided. 

Market valuations of renewable electricity producers have fallen far below the peaks. According to one metric - the ratio of companies' enterprise value (EV) to forward estimated earnings (EBITDA) - median valuations in the sector globally stood at 9.7 times forward earnings at the end of April 2025, down from 14.5 at the end of 2020.² This share price compression reflects three converging factors. 

First, the cost of capital since interest rates soared in 2022. Higher borrowing costs can significantly reduce the financial attractiveness of renewables projects given the long-term nature of assets. Some market participants have been caught out by failing to manage this risk effectively. 

Second, supply chain inflation. Constraints in the availability of key components led to spiralling project costs: the cost of building a wind turbine rose by 38% over 2021 and 2022.³  

Third, and most recently, policy headwinds. The new US administration has made clear its antipathy to renewables and is blocking federal permits and land leases for US wind projects. Current import tariffs on Chinese and southeast Asian solar panels creates uncertainty for the economics of new solar farms.⁴  

Following the sell-off, we observe a disconnect between public market valuations of renewable portfolios and the intrinsic value of operational assets with long-term, contracted cash flows. 

Private equity grasps the nettle 

Over the past 18 months, six listed renewable IPPs have been taken private in transactions with an EV exceeding US$1bn. Premiums on these takeovers have averaged 33%.⁵ Valuations have been consistently strong. Even the relatively low premium paid for Masdar's €3.2bn acquisition of Greek-listed Terna Energy (held in IEM) was largely due to a deal of some kind being widely anticipated. EV to EBITDA multiples ranged from 13 to 20 times trailing earnings on these deals.⁶ 

For private renewable developers, the current lower valuation of listed IPPs, despite strong fundamentals, has shifted focus toward acquiring operational asset portfolios over development-stage projects. However, with Europe facing limited alternatives to renewables in meeting rising electricity demand and energy security goals, the long-term value of development pipelines remains intact. 

The president of Brookfield Asset Management - which acquired French-listed IPP Neoen in 2024 and the US onshore renewable assets of National Grid in early 2025 - recently noted that "the [difference] between public market valuations and private market valuations in this space is very large right now [meaning] we expect there will be investment opportunities [among listed companies]".⁷ 

Location, location, location 

Although valuation dynamics and the long-term fundamentals are supportive for long-term investors, in our view, the geographic location of renewable assets remains crucial. Jurisdiction-specific policies and regulatory frameworks continue to drive divergent valuations across markets.  

For example, policy uncertainty has impacted the value of pipeline assets in the US, despite the economy's rising power requirements and renewables' time-to-power advantage over other technologies. Permitting delays persist in many other markets: Germany's recent success in streamlining approval processes for new renewable projects is atypical.⁸  

As listed equities investors, we perceive particular opportunities in markets like Canada where policies remain supportive and where market dynamics favour incumbent renewable developers.  

The likes of Boralex (currently held), one of the largest IPPs focused on onshore wind and solar in Canada, have established relationships with First Nation communities that are necessary partners for new developments. The development portfolio of Northland Power (currently held), another Canada-listed IPP, is skewed towards other supportive markets in northern Europe, Asia and Canada in the case of its onshore pipeline, with a strong contracted asset base driven mainly by offshore assets in the North Sea. 

Selectivity is needed, but we believe the dislocations in IPP valuations that have mobilised far-sighted private equity buyers highlight opportunities for listed equities investors with similar time horizons. 

¹ Impax analysis, April 2025
² Impax analysis based on Bloomberg data, 30 April 2025. Median EV/EBITDA figures based on companies in the GICS renewable electricity sub-sector with a market capitalisation of US$500mn or more, as at 30 April 2025. NTM best estimated EBITDA (earnings before interest, taxes, depreciation and amortisation) based on Bloomberg end-of-year consensus
³ Energy Monitor, April 2023: Data insight: the cost of a wind turbine has increased by 38% in two years
⁴ Bloomberg, 28 April 2025: Trump Tariffs on Steroids Will Rewire Solar Supply Chains
⁵ Impax research / Bloomberg / BTIG / NBF, April 2025. Premiums to the closing price before takeover announcements
⁶ Impax research / Bloomberg / BTIG / NBF, April 2025. Last 12 months basis
⁷ Gara, A., 12 February 2025: Brookfield hunts for green energy bargains after Trump sell-off. Financial Times
⁸ Bloomberg, 27 August 2024: The Secret Behind Germany's Record Renewables Buildout

References to specific securities are for illustrative purposes only and should not be considered as a recommendation to buy or sell. Nothing presented herein is intended to constitute investment advice and no investment decision should be made solely based on this information. Nothing presented should be construed as a recommendation to purchase or sell a particular type of security or follow any investment technique or strategy. Information presented herein reflects Impax Asset Management's views at a particular time. Such views are subject to change at any point and Impax Asset Management shall not be obligated to provide any notice. Any forward-looking statements or forecasts are based on assumptions and actual results are expected to vary. While Impax Asset Management has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability or completeness of third-party information presented herein. No guarantee of investment performance is being provided and no inference to the contrary should be made.