Global private equity and venture capital investment in the UK renewables sector during the first nine months of 2024 outpaced flows to the US.

Renewable energy companies based in the UK pulled in $7.96 billion year to date through Sept. 30, surpassing the combined total of the previous four years, according to S&P Global Market Intelligence data. The amount also far exceeds private equity flows during the same period to the US renewables sector, which has typically attracted more investments than the UK in past years.

One outsized deal, Energy Capital Partners LLC's planned $7.87 billion acquisition of Atlantica Sustainable Infrastructure PLC, accounted for most of the investment that the UK renewables sector received.

In the US, renewable energy companies attracted $1.08 billion of private equity investments between January and September, less than one-third of the $3.48 billion of funding secured in 2023. The annual total is therefore on track to fall for a second straight year despite enactment of the 2022 Inflation Reduction Act, which aims to provide about $369 billion in clean energy investment incentives.

Even with private equity investment in US renewable energy companies trending down, the investment secured by the sector from 2020 to the end of the third quarter of 2024 still exceeds the amount that the UK attracted over the same period. The value of private equity-backed deals in the US renewables sector from 2020 through Sept. 30, 2024, amounted to $16.06 billion, compared to the $12.56 billion the UK pulled in.

Largest transactions in UK, US

Energy Capital's planned acquisition of Atlantica is the largest private equity-backed transaction in the UK renewables sector in 2024. Its ECP V LP fund is set to purchase Atlantica from Algonquin Power & Utilities Corp., which decided to sell following a strategic review of its renewable energy business.

The second-largest deal is a $70.8 million investment in hydrogen power company GeoPura Ltd. by a group including Sustainable Impact Capital Ltd. and General Motors Ventures LLC. GeoPura plans to use the funds to expand production capacity and support other developments.

"Most countries in Europe and the UK want to be at the forefront of renewable energy," Glenn McCombs, chief development officer at power plant operator IHI Power Services Corp. told Market Intelligence. "Interestingly enough, we're also seeing a considerable amount of investment from the UK in renewable energy in the US, and I think that's going to continue."

– Download a spreadsheet with data featured in this story. – Catch up on global private equity activity in the third quarter. – Read up on rebounding private equity-backed exits.

The largest private equity-backed transaction in the US renewables sector in 2024 is a $244 million investment in geothermal energy company Fervo Energy Co. from a group including Capricorn Investment Group LLC. Fervo will use the funds to speed up its geothermal energy deployment.

The second-largest deal is The Carlyle Group Inc. and Manulife Investment Management Ltd.'s $225 million investment into battery storage company NineDot Holdings Inc.

Energy policy uncertainty

The UK Renewable Energy Association believes private equity firms are limiting investment in US renewables before the November presidential election, which could bring in a new administration that may change current energy policies.

"[US] policies have generally been positive recently." Green Finance analyst Francesca Cullaney wrote in an email to Market Intelligence, naming the Inflation Reduction Act as an example.

"Even then, the federal election cycle is every four years, and ideas around climate action and renewable energy are still controversial among US voters and politicians. This isn't ideal given the three- to seven-year time frame most private equity firms stick to," Cullaney added.