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Electricity generators and distributors planning joint ventures or acquisitions to further smart energy technology ambitions, new study finds

Large electricity generators and distributors are planning joint ventures and acquisitions and are looking at ways of developing innovative business models to further their ambitions in smart energy technology, according to newly published research.04 Oct 2017

The new report by Pinsent Masons, the law firm behind Out-Law.com, highlighted the potential of smart technologies to help utilities "get the most out of intermittent renewable energy" and "capture new revenue streams through offerings such as home automation".

This is part of our series analysing the challenges and opportunities ahead for companies embracing smart energy technologies. For more, sign up to receive an exclusive Pinsent Masons research paper on smart energy technology, supply, storage and investment.

Smart meter systems, data analytics and management services, mobile applications, battery storage technology and vehicle-to-grid technology are among the examples of smart energy technologies that utilities are seeking to explore.

The report, which surveyed 200 investors and senior executives from utilities with revenues above $1 billion based across Europe, the Middle East, Africa (EMEA) and the Asia-Pacific region, identified industry concerns about the cost of developing such technology in-house.

According to the study, 62% of executives said factors such as the high investment costs associated with setting up research and development programmes, and a lack of expertise, had put them off investing in smart energy R&D in-house.

However, 90% of the respondents said they intend to enter into a joint venture, make an acquisition, or both, to "take the next step in smart energy technology", the report said.

Technology law expert Andrew Brydon of Pinsent Masons said: "Companies are increasingly looking to attract or empower people with new and complementary skills – perhaps by launching a new division. Alternatively, an acquisition could help shape their future plans."

According to the new report, "onerous compliance requirements" around completing M&A deals is one of the reasons why some utilities are looking to access smart energy technologies and expertise via joint venture arrangements. The appetite for joint venture deals is more prevalent in the Asia Pacific region than in EMEA, it said.

Pinsent Masons said that 85% of respondents to its study who said they are planning an acquisition in smart energy technology said they are considering buying assets valued between €50 million and €500m.