What’s next for M&A in the Energy Transition?

Investment in the energy transition is accelerating. Whether driven by the need to combat climate change or enhance energy security, global energy investment trends are shaping how power is produced, distributed, and consumed.

As we approach the UK’s 2030 and 2035 net zero milestones, the energy landscape is evolving rapidly. Rising electricity consumption - fuelled by data centres, artificial intelligence, and electric vehicles - is adding pressure to modernise infrastructure.

While investments in capacity-enhancing infrastructure are driving global deal value, mid-market investors are increasingly attracted to demand-side solutions that improve energy efficiency, flexibility, and optimisation.

Drawing from our recent advisory work on M&A opportunities in the energy transition, we’ve outlined key insights into the top investment opportunities and risks. As we enter a new financial year for many, we also highlight five strategic actions investors can take to maximise returns and unlock the full potential of the energy transition.

Key Investment Areas in Energy Transition

Investors are focusing on several high-growth areas:

• Energy efficiency technologies – Enhancing industrial processes, building insulation, heating, and cooling.
• Renewable and low-carbon energy assets & supply chains – Onshore operations and maintenance, floating offshore wind, solar, and synthetic fuels.
• Battery storage and grid modernisation – Utility-scale storage for grid stability and energy security.
• Carbon Capture, Usage, and Storage (CCUS) – Technologies to mitigate carbon emissions.
• Critical minerals and material supply chains – Essential elements like lithium, copper, and cobalt.
• Transport infrastructure – Expansion of EV charging networks and related systems.
• Consumer-focused energy solutions – Long-term cost-saving services, such as Power Purchase Agreements (PPAs) and demand-side flexibility.
• Digital solutions for energy transition – IoT for energy management, AI-driven grid optimisation, and blockchain for energy trading.

The Future of Energy and Investment Risks

Despite the rapid shift to renewables, fossil fuels will remain a crucial component of energy security in the near term, with significant new LNG projects being approved. However, achieving a fully net zero energy system by 2030 remains uncertain. Investors must assess multiple energy pathway scenarios to understand potential risks and ROI impacts should net zero timelines be delayed.

Several external factors could stall investment plans, disrupt cash flows, and affect capital allocation:

• Policy and regulatory changes – Incentives, planning reforms, statutory reporting requirements, and Market-wide Half-Hourly Settlement.
• Technological scalability & adoption – Uncertainty surrounding nuclear, hydrogen, and other emerging solutions.
• Geopolitical volatility – Supply chain disruptions and energy security risks.
• Macroeconomic pressures – Interest rate fluctuations and market pricing instability.

These risks can be challenging to manage, but investors with energy and utilities portfolio companies can take proactive steps to mitigate exposure and maximise returns.

Key Actions for Investors

• Data-driven decision-making – Regularly gather, model, and analyse market insights at the board level.
• 100-day value creation plan – Address underperformance identified in due diligence and implement quick wins to drive growth.
• Commercial excellence strategy – Focus on value-added services and profitable customer segments.
• Operational efficiency initiatives – Design a future-ready operating model that enhances capacity and long-term scalability.
• ESG and Net Zero integration – Develop a roadmap to leverage environmental and social impact opportunities, considering double materiality perspectives.

Working with BFY

BFY has a proven track record of supporting private equity and corporate M&A clients investing in the energy transition. Below are some of our recent engagements, showcasing how we help investors navigate complex transactions and maximise value:

Advising Arcus Infrastructure Partners LLP on the Sale of Horizon Energy Infrastructure and Smart Meter Assets to KKR

We provided commercial and strategic due diligence for this transaction, evaluating the future development of the energy and metering markets. Our analysis gave Arcus critical insights into market risks and opportunities, leveraging our deep expertise in the energy and utilities sector.

Supporting Renew Holdings plc in the Acquisition of Full Circle Wind Services

BFY advised Renew Holdings plc, a multidisciplinary engineering services business, on its acquisition of Full Circle Wind Services, a leading wind turbine operations and maintenance provider.

We conducted commercial and operational due diligence, offering insights into the addressable market, competitive landscape, and key operational risks. Our team, including Kevin McCullough (Chair at BFY Carbon Strategies), brought extensive experience from senior leadership roles in power generation and renewables, helping Renew validate their growth strategy and investment thesis with confidence.

Advising LDC on ESG Matters in Their Investment in Power Saving Solutions UK

Our ESG advisory work supported Power Saving Solutions UK as they solidified their position in the UK’s growing battery storage industry. We provided guidance on integrating sustainability into their business strategy, enabling them to expand their product offerings and diversify into new end markets.

For more insights on emerging M&A opportunities in the energy transition and how to capitalise on them, contact Angela Tooley.