title: 220. Deal Trends for M&A and Energy Financing - Mar26
author: Redefining Energy
contenttype: podcast
publication: Redefining Energy
published: 2026-03-16T02:10:02+00:00
sourceurl: https://dts.podtrac.com/redirect.mp3/api.spreaker.com/download/episode/70482158/220_natasha.mp3
word_count: 6757
1 With a rund segle end from London and Gerard read 2 from Berlin. 3 This is redefining. 4 Energy today on refin Energy, George, we're going to talk 5 about deal trends in MNA and energy financing. 6 Absolutely, this is very important because we have a nice 7 saying in the finance world follow the money. 8 And here we're really following the money. But first of all, 9 from our partner. 10 A Bloco Energy is Europe's premier leaser of ten foot 11 container mobile batteries built in Europe with COTL best LFP cells. 12 A Bloco Energy serves fourteen European countries, including France, Germany 13 and the UK. Our Bloco's batteries can be leased for 14 any duration between six weeks and six years, and they 15 are monitored by the Dutch award winning platform school a 16 block O Energy. Make your life easier, make your business 17 more flexible. 18 Back to the show, and we have a wonderful guest 19 that we loved a lot and came. Would you believe 20 it's six years ago when we were just amateur podcaster. 21 It was right at the beginning, just six years ago 22 and we started. Yeah, unbelieva. Yeah, so I can't believe 23 time flies that so much. Anyway, it's great to have 24 Natasha Luther Jones again on the podcast. 25 And for those few who don't know who Natasha is, 26 she's partner Global Culture, Energy and Natural Resources at the 27 law firm DLA Piper. But she's mostly known for a nickname, 28 which is. 29 The the quit a PPAs. 30 But you're going to see we're gonna go much further 31 than just PPAs. 32 Yeah, that was the old nickname from six years ago. 33 The world has changed anyway. It's actually great to have 34 her to come on to talk about what has changed 35 and what's hard and what's not. 36 So a bit of music and then we bring her 37 on the show. 38 Natashet, it's great to have you on the show again. 39 It's been a long while. 40 Oh thank you for having me. It's nice to be 41 back on the show with you both. 42 Natasha. We look into the archive. You came episode twenty 43 eight in June to or twenty and now we're episode 44 to twenty two or something, So I mean, what a journey. 45 And before you comment, I found a speech by Winston 46 Churchill talking about six years. We may allow ourselves a 47 brief payod of rejoicing, but let's us not forget for 48 a moment the toilet efforts lie ahead. We have come 49 through the worst of six years of suffering and peril, 50 so that's a bit dramatic, but six years that's the 51 length of World War Two. 52 I have to say that a really interesting intro, Lauren. 53 But you're absolutely right. A lot has changed since the 54 last time I was on this podcast six years ago, 55 including actually you two, and I'm not talking about the 56 fact that we've all aged. I'm talking about how you 57 two now become this sort of celebrity podcaster as it's 58 some more professional than it was back during COVID in 59 twenty twenty. 60 I can't believe it's six years ago. I really can't. 61 It's just unbelievable. Time flies when you haven't done. It's 62 a pity about Lauren's Winston Churchill accent, doesn't it, because 63 it was a really lovely quolt. 64 Yeah. 65 I agree. 66 Let's dive into what's happening and how the market is changing, 67 because you are in the art of it and you 68 used to be the queen of PPA but now it's 69 so much more complex sophisticated. So what are the trends 70 you're seeing right now in terms of deal structure, deal 71 financing all over Europe. 72 If you look back over the last six years, a 73 lot has changed globally, and many of your episodes have 74 covered some of the things that we've all faced. I 75 suppose what hasn't changed from a DLA Piper perspective is 76 that I'm still here and I'm still running the energy practice. 77 But DLAs now firmly established itsself as one of the 78 largest global law firms in revenue terms, and over the 79 last four or five years we've managed to move up 80 to the league table, so we're like either number one 81 or two for energy transition deals on M and A 82 and PS. So it's allowed us to really see how 83 the landscape operates globally. Where are those priorities now they 84 are BEZ. Wow, it's mind blowing. Over the last couple 85 of years, the growth in BEZ we've seen, that's so 86 client wise. If you look at the figures, fifty percent 87 growth on installation last year. Actually that's just mirrored in 88 the legal sector and advisors sector as well. It's been 89 our biggest growth we are now for the last couple 90 of years. What we've seen in the M and A 91 is six years was a long time. We still had 92 a ready to build model then, which was super popular. 93 We had a single asset buying and selling model. We've 94 now moved into the Wilder's platform, investments developers moving into 95 that world of IPPs. And then I suppose what follows 96 that is then that move of financing in the whole 97 code structures we're seeing rather than the single asset financings. 98 And final trend I have to say is data centers, 99 hyperscalers AI the impact that's having on renewable energy electricity. 100 Those would be my top key trend one. 101 Now, Natasha, maybe let's dig into each of them because 102 they're really really interesting. Let's start with the battery energy 103 storage area. I just only want to say from my 104 own cor perspective and a Lexa perspective, we did our 105 first financing ten years ago in the space and nobody 106 was doing anything, and now suddenly it's the heart of 107 this energy transition. And the thing I love about it 108 is it's complex. But I'd love to hear your views 109 and what you see in best and what you see 110 the trends are across Europe. 111 You are right, it's complex, but it's only complex because 112 it's new and we're figuring it all out. We've been 113 doing solar and wind for years, so there are tried 114 and tested positions for that, and I suppose BEZ does 115 bring in that more element of technical knowledge when you're 116 trying to optimize it. So what have we genuinely seen. 117 You've got very mature markets now with the UK has 118 been really successful and developing out the Bears market with 119 all the revenue stacks available there and the co location 120 of Bez under CSDS in the UK. Two. I suppose 121 what I've found really interesting is going into the new 122 markets and then seeing how we can finance and develop 123 Bears in different markets. I know Germany's very close to 124 your heart, Gerards, So I don't know if you saw 125 the deal we did a couple of months ago that 126 was super interesting because it combines all sorts of different 127 parts of bed Natasha. 128 That's the one random berg you're talking about in the 129 old airport. Yeah, it's amazing. Yeah, maybe talk a little 130 bit about it. 131 Five hundred mega walk of Bear, one hundred and fifty 132 megawatts of so co located. But what you're doing is 133 you're taking Brownfield's an old military airport, developing that and 134 then having a data center development on it as well, 135 so we work with Prime Capital on that, and that's 136 the sort of deal that's really exciting because it's not 137 Bears on its own, it's Colo and we all love Colo. 138 But actually it's also encouraging data centers to come there 139 and then buy the green power. 140 Yes, Nata Sha, I mean, there's so much stuff to 141 say about Germany and people ask us all the time, 142 but it's not just there. Because you've seen markets like Italy, Finland. 143 Can you go in certain structure? Are they the same? 144 Aw they different? How do you see in? 145 What's really interesting in both of the markets that you've mentioned, 146 and this is the same in quite a few different markets, 147 is the deals can be structured and the deals are 148 very different, even if as they're in the same country. 149 So if you take Italy for example, that's the real 150 boom area. The amount of clients who wanting to do 151 deal in italy's really really increased recently, and a lot 152 of people when they talk about Bears in Italy talk 153 about the max result. You know, oh, well you've got 154 the max there. That's great. Well, actually you can finance MAXI. 155 I'm sure we'll see a whole pipeline of projects coming 156 through financing MAX. But we actually project financed last month 157 the first ever Bears facility in Italy and that didn't 158 have a MAXA that that basically got finance and it 159 was the Air for a transaction two fifty megawatts where 160 we got a tolling agreement with Shell and that's what 161 enabled the financing on that project rather than the government 162 auction of MAX. But you could see them both Finland again, 163 different model. You don't have a government auction like the 164 MAX there, but we've seen financing structures where we've project 165 financed assets there where we've had contracted revenue with tolling agreement, 166 but we've actually also financed on a merchant basis. They're 167 clearly different finance structure. But seeing the likes of these 168 new tech players that come in and facilitate it, like Capello, 169 that enables the financing. So that structure that deal is 170 very different to a deal that then has a tolling agreement. 171 I think that's what's really interesting about the best market. 172 It's not one size fits all. 173 Natasha, can we dig into the financing there, because that's 174 for me, the biggest trend since we'd asked spot Woken 175 is that if you think of a lot of what 176 we've been doing for twenty years, renewables has just been 177 financed with a government PPA at the end of the 178 day a CFDA or a feeling TERV and now you're 179 going into having to take merch and risk, and then 180 you've got these so called tolls and stuff like that. 181 Maybe talk about what you're seeing out there and what 182 the trends are and how you see it going forward. 183 It's a really interesting question. And again on a country 184 by country basis, it does depend and it also depends 185 if you've got co location as well, because that hybrid 186 solution for a co location facility in Spain will look 187 very different to a co location facility in the UK, 188 where maybe you don't have a gate to offer for 189 your bears in co location, but you have been given 190 a gate to offer for solar. But generally, i'd say 191 most lenders prefer a toll, maybe not for the full output, 192 it might be a certain percentage. But we do see 193 also financings taking place with optimization agreements. Now clearly it 194 does affect the gearing and different positions on the covenants, 195 and it will depend what the project owner wants to 196 achieve and it there isn't one approach for financings. You 197 don't tend to see standalone financings for solar anymore. That's 198 moved definitely into the hold co financing because it's tried 199 and tested and the lenders are really comfortable with it. 200 Subject to clearly like say standalone solar in Spain and 201 the need to bring on BEZ for that. But you 202 tend to see hold co structures more for the solar 203 with BEZ maybe coming in. I still see that stand 204 alone financing for BEZ being quite an active market because 205 people are trying to figure out what the right revenue 206 and ric model is. 207 It's just going to get more complex, to tell you 208 the truth, because now that people run BESS or operate bes, 209 it's a totally different animal from Winner Solar case. Between these, 210 it's any what I kepture prices, but the best You 211 decide every day what you're going to do. You're in charge, 212 you and all the algos who are managing the best 213 and plus you've get your own new stack. So am 214 I charging? Am I discharging? Am I putting option? And 215 you know, do I work on the physical market? Do 216 I work on the congestion market? Do I sell premiums 217 the level of sophistication, and weirdly the guy who start 218 to master best management are former gas operators. 219 Yeah, what's interesting, Lauren. As you see this market develop, 220 you'll see the hyperscale's coming into this market. So I 221 totally agree at the moment, take if you take a 222 hybrid asset, you need a very sophisticated player to take 223 a ibrid asset and then optimize that. But we are 224 seeing signs that some of the hyperscalas are now moving 225 into this market too, So I think that's a watch 226 the space. 227 Let's follow up on that. So how are they going 228 to come into that minor market? In other words, are 229 they going to sign PPAs, Are they going to go 230 and actually vertically integrate, are they going to partner with people? 231 How do you see them sorting out that energy side 232 going forward? 233 Basically, I don't think it will be one size fits 234 all for all of them. And this is me kind 235 of anticipating where the market will go. Signing pure PPAs 236 for Bears probably needs this GEO protocol to come in 237 in Europe which will allow that transfer of certificates attaching 238 to when generation occurs to actually time shifting it to 239 when it dispatches, and I think so some of them 240 will need to wait for that to happen before PPAs 241 are signed. So I think it will be the latter 242 that you mentioned, which is partnership working CLIs mostly with 243 people then to try and help firm and provide a 244 better profile for them. 245 Just the other trend that you said that I thought 246 was quite interesting, which was you talked about whole co financing, 247 and I'm totally with you on this because I just 248 I'm coming from a copper finance point of view where 249 you would normally what you would do is you would 250 just finance something at a project level, right, That's how 251 you did it in the past. But as you said, 252 now what you're doing is you're not doing it at 253 that level. You're doing it at at the whole co 254 level that has a whole portfolio list. Talk a little 255 bit about why this is happening and also just how 256 you see the trends going forward in terms of financing. 257 As I said, these type of platforms does call them 258 like that. 259 It starts off with with the trends that we've seen, 260 which is the m and A market consolidation and the 261 move for investors actually investing in developers and turning developers 262 into IPPs and then building these platforms, and it's far 263 more flexible. It's a to deal financially to provide a 264 bigger facility for that whole co platform than to be 265 able to draw down to fund construction on a multiple 266 project basis. So I think it goes hand and hand 267 in the trend of the consolidation of these big players 268 investors investing in developers and IPPs. 269 Which means that if you had missed the boat three 270 four years ago creating this platform, so not only owning assets, 271 but managing them and optimizing them and doing what I 272 used to do twenty years ago when I was training commodities, 273 which is called cross collateralization. Maybe it's a new world 274 for the arulnerable energy, but I can tell you it 275 was done twenty years ago in the fossil fuel area. 276 Assets are natural hedge one against another, and of course 277 if they are natural hedge, it's much cheaper because they 278 complement themselves, which means that going from a single asset 279 to a portfolio level requires a level of knowledge and 280 sophistication not only on the operators, but on the lenders 281 and even the lawyers like you or organized. So what 282 you see is you said conceliation. Have those people improved 283 the same way or some really got it and others 284 have totally missed the boat and they end up with 285 a series of assets, and maybe they're weaker than the 286 one who conceited better. So question is long, but the 287 problem is complex. 288 It is indeed if I pick up that sort of 289 cross collateralization point though, and people get it in this market, 290 and this is a whole move to hybridization of renewable 291 energy assets, and in a way it applies equally to 292 the whole co portfolio financings that are occurring. This does 293 allow lenders to take a more sort of pragmatic view 294 across the whole portfolio. So if you think about Bears 295 and Solo, you might agree a certain percentage of merchant 296 revenues and then you might agree a certain percentage of 297 contracted revenues. So you look at it from a whole 298 portfolio base is and a hybrid solution and really set 299 out those parameters at the top which allow then the 300 IPPs that you believe in, the sophisticated IPPs to build 301 that ideal platform that they can. 302 Do Lauran actually an attached to both here. Really, I 303 think it's a really interesting talking point here because I 304 think we're only at the beginnings of these financing structures 305 and I actually don't believe that the renewable industry has 306 that capabilities internally, which means and Lauren, you pointed to 307 it earlier when you sort of talked about, you know, 308 the whole area and the whole gas trading area, et cetera, 309 et cetera. I suppose my question to both here and 310 Laurn obviously this you're a commodity trader for many years. 311 How do you see this market going? For a start, 312 and then the Natasha, I'd be interested also to hear 313 your thoughts on it as well well. 314 John, I'm supposed to ask questions, so. 315 You are, but you're an expert in that area given 316 what you did beforehand, right, so you can see boat worlds. 317 That's where I'm coming from, anot. 318 It's a different mindset. Some infrastucture investors are smart, and 319 I know a lot of them, and they will adapt, 320 but it's a different mindset portfolio management. It's like, at 321 some point you go to BP, who's processing all those 322 molecules we're gonna do electron, Man, it's not simple. An 323 electron is not virtual molecule. It reacts differently. And if 324 your model was AK twenty year feed in tariff, which 325 is the equivalent of a government bond plus or minus 326 at the capture rate or the lot factor, you're gonna 327 have a really tough time not only understanding what's happening 328 in your portfolio, but also the way you're going to 329 raise fund because if your slides are ten years old, 330 you are gonna be hurt. That's my view now, not 331 a shure you're in the in think of it. 332 Please, I've got a more optimistic view than you, and 333 it's probably because I've got these three deals on the 334 table currently. By the time this podcast gets released, one 335 of them will have closed and it'll be out in 336 the press. I think you'll be pleasantly surprised to see 337 depending on how much of it is disclosed, man, how 338 much of it's confidential. But I think there are plenty 339 of players who have the mindset and we're moving into 340 that world quite quickly. 341 Exciting times ahead. Indeed, I'm always. 342 The guy's bearing venues and you're always optimistic, But that's 343 the dynamics. The one who really get it will consolidate 344 with the one who don't get it. 345 That's not how I would phrase it. I phrase it 346 as consolidation is happening, and the people looking to invest 347 in see the technical experience and that in country knowledge 348 that they may not have. And we've seen a huge 349 amount of consolidation in the energy sector generally. And what 350 was interesting when we looked back at the M and 351 A figures for last year, you had actual deal amounts 352 going down, but you had deal value growing by twenty percent, 353 which shows you the deals are bigger and they're more strategic. 354 And if I just look across the p for some 355 of the clients we've worked at working with Elgin Energy 356 for ten years, seeing their development from developer IPP, investment 357 by CIP, working with BEV startup Octopus Energy Financing, now 358 buying the UK EV charging business from stack Craft, that's 359 what we're seeing. We're seeing that sort of journey and 360 I think that development will continue. 361 By the way, I think it's even got to go 362 well beyond what we're talking here in terms of best 363 and renewables. I think you're also going to see it 364 in the utility space as well, because it's the same 365 trends we're talking about, and it's the same complexities that 366 they have to deal with. And if you don't have 367 the capabilities or the scale needed, whether you're you're renewable 368 or customers are grid to' in trouble going forward. 369 Oh, you've hit the nail on the head. Actually, one 370 deal I didn't mention, which we signed this year we 371 sold Flexitricity for Quinbrook to Drax. That's exactly the point 372 you're making. Drax decided they needed that sort of business 373 within their portfolio and now they're offering some new products 374 because of that exactly. 375 In other words, what we're saying also is we're seeing 376 this the m and a consolidation taking place. The question 377 is is it going to accelerate now? In other words, 378 have we reached the peak or is the peak in 379 twelve months eighteen months? How do you see that? 380 I don't think we've seen the peak. We're seeing any 381 increase on I hate to mention the US in this 382 podcast because we've managed to get to like twenty five 383 minutes without Lauren mentioning it. So this is my bad 384 everyone forry, But we've seen because of what's going on. 385 We've seen that European investment come back into Europe, and 386 then we're seeing the investment from the Middle East and 387 from the US coming into Europe. So I think, particularly 388 from a European basis consolidation, I don't think we've seen 389 the peak. I think we've still got lots to come. 390 I'm certainly looking forward to an even busier year this. 391 Year, Natasha. A lot of the consolidation has taken place 392 is because a lot of the smaller players just don't 393 have the capabilities. Now, what you're also saying, I agree 394 with you totally. What you've got is a lot of 395 small our players who realize and now's the time to 396 actually really scale the business and have an impact, right. 397 Sham, We've really been good so far. We haven't talked 398 about hyperscalers yet, so it's time to dive into hyperscalers 399 that are centers. And of course it's all the range 400 in the US, but it's fever is coming also in Europe. 401 What do you see? 402 You know? I love a hyperscaler Ppa twenty twelve, my 403 first a hyperscaler PPA, and I've loved following the market 404 and actually they are the biggest driver of the market 405 now for us globally. A lot of people have said 406 to me, oh, well, you know the figures for corporate 407 PPAs they really fell off last year, but actually there 408 were still twice as big as they were in twenty twenty. 409 And the difference is the biggest percentage now is being 410 driven by the hyperscalers and their demand for power, which 411 is outstripping all the other buyers in the market. So 412 it's a super exciting time. And then what's been really 413 interesting also is seeing renewable energy generators also understand and 414 want to work and adapt their strategy to bring in 415 the sort of digital energy side of the piece. Could 416 you have powered land, can you provide bridging solutions for 417 data centers? How can we as an industry facilitate more 418 data centers in a green way? 419 And I think the other thing I'd add to it 420 is a whole move to what I call energy parks 421 sort of the words what you're doing is and you 422 talked about the better one and Brandenburg going on, that 423 trend has going to intensivey going forward, otherwise you're going 424 to be building generations very close to demand. 425 Totally agree, and what will be interesting to see then 426 is the hybrid approaches taken to the generation affets. Will 427 we see in Europe more biogas on these sites? Will 428 it be simply solar and bears? Will there be wind? 429 We know what we're seeing in the US, which is 430 some of the gas coming in and nuclear coming in 431 for the hyperscalers, So it'll be It will be super 432 interesting to see how this market develops over the next 433 couple of years as they all race or in this 434 sort of data center ia rate that they're in to 435 get to where they need to get to. 436 And can I ask you just in terms of countries 437 where this is going to because Okay, I live in 438 between Ireland and Germany, and if I take the case 439 of Ireland, look, the grid is completely fallen. You know. 440 I know Google wants to have a whole pile of 441 power here, but they're not going to get it. So 442 where do they go next? 443 I have got some hope that the UK is really 444 going to continue to develop, and we have got grid 445 reform finally coming hopefully to a conclusion with the gate 446 two offers that we should be getting. We should hopefully 447 see more data center development in the UK, Finland and 448 the Nordics cheap power, it makes absolute sense that different 449 places across the Nordics should continue to see growth, and 450 then maybe Eastern Europe as well. They're going to go 451 where the power is cheat. Also, as hybrid solutions get 452 developed in Spain, you're not seeing a huge amount of 453 hyperscala pure solar PPAs in Spain now for obvious reason. 454 But as we see in these hybrid solutions develop in Spain, 455 then that seemed like a sensible area for growth too. 456 And in a certain way, having all those hyper scalers 457 signed PPAs and probably even private wires, it's really you 458 know what they say in the US, you know, bring 459 your own generation, or at least partially because what we 460 see in the US is okay, if you want to 461 connect eight thousand, six hundred hours a year, you need 462 to add five years. But if you agree to forego 463 a few hundred you'll get the connection much faster, which 464 means that the hyper scalers must integrate all those backup, 465 whether it's recipal getting engine or even we see fuel 466 cell for more boeing, everything go the way the dealer 467 structure is that a bit of a virtual way to 468 bring a bit your own power. 469 How do you see that everything's on the table with 470 the hyperscaler. That is entirely possible, And in some countries 471 it just depends where they want to see their demand 472 and where the hyperscal of data centers are getting trains. Again, 473 on site generation is really important, especially in some of 474 these places. Again, the Nordics is ideal for that, or 475 if you have a massive, big industrial facility, on site 476 generation absolutely makes sense. 477 Natasha, So you're going to come back then in six 478 years time? So what are we going to talk about 479 six years time? Oh? 480 God, well, I don't know. You've become superstars by then, 481 won't you. So we'll have to wait and see. 482 I won't. 483 I'll definitely promise, I tell you what. I'll promise definitely 484 to come back in six years time. But I'm not 485 promising about what I want to talk about. 486 I need to correct the wrong six years ago I 487 named you the Queen of Ppa. 488 It's finished. 489 You're the Empress of Energy. 490 Oh thank you, Lauren. I'll take that Moniker and then 491 I'll leave you six years for you to decide on 492 a new one. Then, thank you. 493 Well, that was a great conversation. We really really really 494 enjoyed that and listen, I'd love to think about it. 495 She's totally on the top of the game. And what 496 is extraordinary is that as the deals are getting more complex, Okay, 497 we add the batteries, we had the data centers and 498 all this co location hybridization, that all financing is becoming 499 extremely sophisticated. And still you have lawyers like Natasha who 500 can wrap everything together and a load of financing to happen, 501 and the banks are getting better. But I'm really sometimes 502 worried that we have a two tier sector where some 503 catch the wave and ride with it and surf on it, 504 and others, if they stay a bit analog in their 505 two or ten model, are really going to suffer going forward? 506 Or how do you see it. 507 Duran, I think that's actually was driving consolidation. But it's 508 as simple as that, because those guys who don't serve 509 that wave just think on to survive, they'll either go 510 out of business or else they will be consolidated. And 511 we actually spend a lot of conversation talking really we're 512 talking about really about renewables and all that the product 513 and also a lot of the flash institutions that have 514 invested in renewables but I think it's much deeper than that. 515 I think you're going to see the exact same thing 516 in the utility space going forward as well. That's the 517 next big one. 518 Yeah, we've seen that in the US. Now there's a 519 lot of issue in Europe, so I'm not sure it's 520 going to be as fluid as in the US, but 521 certainly we'll have less actors. They need to un est curtailment, 522 they need to honest capture rates, negative prices. The system 523 is much more complex to understand. But on the other hand, 524 the solutions, which are altgoes, digitization, batteries, solution exists, but 525 it's a very very complex set of tools you need 526 to master and not all of them will. 527 Actually, that's why I think it's such an exciting space 528 to be at a present round because I've just moved 529 away from the simplicity of feeding entire financing to now complexity. 530 It's cool complexity, and that's what you do again and 531 again at alex a. 532 Capitan exactly, That's what that's what we're doing. That's I said, 533 that's why it really excites the hell out of me 534 now because it's like you sort of feel your time 535 is coming okay. 536 John, we like to thank Nata char Luther Jones no 537 more the Queen of Ppa, but the Empress. 538 Of Energy, the Energy Empress. 539 Empress. Yeah, and I took to you next week. 540 I look forward to the front. 541 Thank you for listening to Redefining Energy. 542 Don't forget to rate the show and subscribe on Apple Podcast, Spotify, 543 or the platform of your choice.