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Renewables market set for slowdown, although sector will prove its resilience
The European renewables market will still see project financing and M&A closings in the coming weeks, despite the onset of the coronavirus pandemic. However, investment activity has already started to slow as the most mature transactions cross the line, while company owners and project sponsors are increasingly opting to hold off on new launches until economies and markets return to some form of normality. Many projects under construction will also inevitably be delayed, as factory shutdowns and social distancing measures put a squeeze on the supply chain and build-out timelines. And with wholesale power prices falling as demand drops off, project sponsors negotiating PPAs are likely to shelve talks with offtakers until rates rise. Investment into renewable energy funds, meanwhile, is set to dip as distracted institutionals delay making LP commitments. Nevertheless, the asset class retains strong fundamentals which put it in a far more secure position to weather market turmoil than other asset classes, and fundraising and financing activity will rebound
During the current market upheaval, with governments across the globe having rushed to implement social distancing measures and lockdowns to slow the spread of coronavirus and its impact, it would seem inevitable that renewable energy investment activity starts to slow.
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