Private equity and venture capital investment in European traditional and renewable energy companies sharply increased in 2022, as Russia's reduction and possible complete cut-off of natural gas to the continent amid the war in Ukraine created an energy crisis.

Between Jan. 1 and Sept. 26, oil, gas and coal companies secured $5.36 billion in investments from private equity firms, up 83.5% from $2.92 billion for the entire year of 2021, S&P Global Market Intelligence data shows.

Aggregate deal value for renewable energy companies soared about nine times, to $5.51 billion from $633.9 million, over the whole of 2021.

The number of deals in traditional and renewable sectors in 2022 stood at 12 and 26, respectively, as of Sept. 26.

The transaction value for the traditional energy sector year-to-date averaged $766.3 million, higher than the $305.9 million average for renewable energy companies.

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Among the largest deals announced so far this year were EIG Global Energy Partners' $4.80 billion acquisition of a 25% stake in Spanish oil and gas exploration company Repsol Upstream and KKR & Co. Inc.'s approximately $2.82 billion buyout of French renewable energy producer Albioma.

Spain recorded the largest amount of investment at roughly $4.97 billion, driven by the acquisition of a stake in Repsol Upstream. France and the Netherlands came in second and third with about $3 billion and $2.30 billion, respectively.

Basket of renewable sources

Europe is returning to a reliance on natural gas, coal and nuclear energy to meet immediate energy needs while continuing to emphasize more investments in renewable energy.

Private equity funds have accelerated their acquisition of European oil and gas assets as they take advantage of oil and gas giants' commitment to transition away from fossil fuels, according to law firm Mayer Brown.

"That has given them the opportunity to acquire assets at attractive prices as multinationals reshape their portfolios in preparation for net zero," Mayer Brown partner Bob Palmer said in a statement.

Renewable energy will remain a hot sector for investors amid soaring energy prices, although it is not limited to wind and solar power, according to alternative assets data provider Preqin.

"Biofuels such as biomethane, renewable diesel, sustainable aviation fuel, and hydrogen are becoming increasingly important in advancing Europe's energy transition. Cleantech, ranging from battery technology to smart grids, could advance Europe's goal to achieve higher energy efficiency and increase the impact of existing renewable energy capacity," Preqin said in its Alternatives in Europe report for 2022.