The energy sector is changing rapidly, and utilities are reacting by buying up one another’s assets, lines of business, and customer bases, in search of the magical combination that will allow them to adapt to an increasingly distributed energy future.

That’s led to a boom in utility mergers and acquisitions, which have been measuring in the tens of billions of dollars per quarter of late -- even when some of the biggest ones don’t come to fruition.

A new report from Ernst & Young (EY) reports $43.5 billion in corporate mergers and buyouts of global renewable and regulated utility assets for the second quarter of 2016. That’s down slightly from $44.4 billion in the first quarter, and up 105 percent from the same quarter last year.

We’ve been tracking the underlying drivers of this boom in utility M&A, which include both cyclical factors -- low natural-gas prices, relative safety in diversified regulated assets -- and much deeper, long-term changes, largely centered on the growth of renewable, distributed energy.

“Ongoing sector and global volatility continues to be at the forefront of investors’ minds in driving the spending,” according to report author Matt Rennie, EY’s global power and utilities transaction leader. “Across northern Europe and the U.S., wholesale electricity prices remain low and most global markets are impacted by the continuing expansion of renewable energy in the total generation mix.”

North America led the global tally with $24.7 billion, with big deals including Exelon’s $6.8 billion acquisition of Pepco’s three mid-Atlantic electric and gas utilities. Europe clocked in at $8.2 billion, with deals including Total’s $169 million purchase of Lampiris, and July’s $1.3 billion takeover of Enel Green Power by Endesa.

But the two biggest deals, representing 35 percent of the second quarter’s total spending, were from Russian and Chinese investors, including the $1.8 billion that China Three Gorges spent to buy an 80 percent stake in WindMW from Blackstone Energy Partners.  

Renewables accounted for $13 billion of the second-quarter total, but more than half the total deals by count. “Both utilities and non-traditional investors are shifting their focus to areas like distributed energy and battery storage,” Rennie wrote. These include utilities not commonly associated with green energy -- Duke Energy is planning to double or triple its renewable portfolio over the next several years, and Southern Company, the giant Southeast utility, is adding several hundred megawatts of renewables as part of its most recent integrated resource plan. Utility companies are also buying and selling energy services businesses, as with Southern Company’s $431 million acquisition of PowerSecure in February, or Constellation purchase of ConEdison Solutions in July.

Any report on the health of utility M&A can’t leave out the biggest rejections. In July, NextEra saw its $4.3 billion offer for Hawaii’s HECO rejected by state regulators, after a very public political brawl over the prospect of a Florida-based nuclear power plant operator (and solar and wind developer) taking over Hawaii’s grid.

But even spurned suitors have sought out other deals, as NextEra did with last month’s $1 billion acquisition of Oncor. The Dallas, Texas-based distribution and transmission utility has been for sale for some time, as its owner Future Energy Holdings has filed for bankruptcy due to the wrong bets it placed on natural gas prices.

Rennie notes that regulated transmission and distribution utilities, with their stable and long-term returns, “are appealing amid an otherwise volatile environment. A bidding war for an ever-shrinking number of network assets is pushing valuations to record levels.”