When the price of a corporate acquisition is declared "undisclosed," in most cases it means it's too small to matter or was at a purchase price that the seller was not too proud of.  And that was the story for most of 2009 in Greentech M&A. Take a look at the list of greentech acquisitions in the second quarter of 2009 - the “undisclosed” mantra uttered with all eight of these acquisitions illustrates the less-than-stellar profits in these initial rounds of green market consolidation.

One of the clear trends we observed over the last few quarters was the consolidation of small regional solar installers looking for some economies of scale.  Although it is arguable if that economy of scale truly exists in the labor and time-intensive boots-on-the-roof PV installation business.

Q3 saw lots more of the "Undisclosed" chant but the AEG and R.W Beck acquisitions looked like reasonable acquisitions and not fire sales.  AEG, bought by "blank check" company Germany1 for $752 million makes power conversion equipment including a line of inverters for solar installations ranging from residential size (1.5kW) to utility-scale (500kW).  Politically-connected and national security-savvy SAIC also made a foray into energy and water management with the R.W. Beck acquisition.

But things start to look a bit different in the fourth quarter.  German industrial giant Siemens acquired Solel, a concentrated solar power components firm for $418.  Solel's majority ownership was held by Ecofin, a UK-based investment firm in what I am informed was a decent if not great return on investment.

And in the closing days of the year, industrial giant United Technologies Corporation bought about half of Clipper Windpower for $270 million.  This is a greentech acquisition by an enormous $58 billion holding company and it is big news.  Big news because UTC is one of the few new entries in wind that might be able to stand toe-to-toe against General Electric.
According to an AWEA annual report, GE installed 3,657 megawatts from 2,438 units while Clipper installed 595 megawatts of wind power capacity from 238 units.    Clipper had sales of $737 million in 2008.       


Is this the year that the globe's industrial giants start buying up wind, solar, smart-grid and next-generation biofuels companies?  Acquisition targets are going to have to have serious revenue and a path to profitability.  Fortune 500 firms don't like acquisitions that are not immediately accretive to the bottom line. Michael Kanellos recently reported on the Top Ten Acquisition Targets in Greentech as well as the top acquirers. With the latest deals down, here's my take: 

General Electric - They are huge in wind and power electronics and have made greentech investments in Solar (CdTe manufacturer PrimeStar and BoP vendor SolarEdge).  They already own most of PrimeStar.
Siemens - Siemens just bought CSP player Solel, is an enormous player in wind and power conversion and would be a likely acquirer of other profitable renewable energy firms.
United Technologies - UTC just bought a majority share in Clipper Windpower and has lots of money in the bank.
Intel - Not the most likely candidate, but Intel has expressed a strong interest and commitment to the Smart Grid.  Any market that helps Intel sell chips is of interest although they have not always had great fortune with system plays or in integrating acquisitions.
Cisco - The number one hope for every smart grid software and hardware company, Cisco has been the top acquirer in the last decade.  That said, utilities are foreign soil for them.
First Solar, SunTech - Both of these solar leaders could continue their drive to capture more of the downstream profits by acquiring PPA players or integrators like Solar City or Recurrent Energy.
Exxon, Chevron, Shell - If one of the many next generation biofuels (cellulosic, algae, etc.) companies starts turning a profit, the oil giants might take an interest.

Steve Vassallo of Foundation Capital, a cleantech investor (Silver Spring Networks etc.) said, "2010 will be the year that finally puts the financial 'green' in greentech investing.  I suspect we'll see a burst of IPOs for the most robust of greentech companies as well as a number of large-scale M&A transactions by a broad array of Global 1000 businesses looking to pick up some promising clean technologies before their valuations start closing in on 10-figures.  I also think we'll see a large uptick in strategic investments in greentech, particularly as supply-side startups come to terms with the need for corporate rich uncles and their big balance sheets."