Why renewable energy M&A is slowing and how CFOs should respond
Dealmaking has never been a simple or linear process – but today, it’s only getting more complicated. What once progressed with relative predictability from target identification to close now stalls amid rising regulatory scrutiny, ESG expectations, and more in-depth due diligence.
For CFOs, this means adapting quickly while still delivering on value and speed.
In the renewable energy sector especially, deals are facing increasing delays. According to platform data from Ideals, the average duration of Environmental & Utilities transactions has increased by 21% year-on-year in 2024, as market dynamics continue to shift.
More broadly, approximately 40% of M&A deals globally failed to close within their originally projected timelines.
With regulators raising the bar, investors demanding more, and operational risks multiplying, CFOs are playing a more active role in ensuring deals withstand scrutiny – and ultimately close on terms that bring the potential for value creation.
The expanding regulatory environment is a key source of delay. In Europe, frameworks like the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) are reshaping the due diligence process. These mandates require granular, verifiable data on environmental impact, labour practices, and supply chain ethics.
For CFOs, diligence has become a cross-functional effort. Under CSRD, acquiring a European company may bring third-party assurance requirements for emission disclosures. CSDDD introduces potential civil liability tied to ESG harms in supply chains. In some cases, regulators even expect forward-looking scenario analysis, not just historical data.
If these risks aren’t surfaced early, deals can face revaluation, added documentation rounds, or renegotiation. Falling short doesn’t just slow a deal, but can derail the entire transaction, exposing the business to regulatory, reputational, and financial risk.
Growing operational and financial uncertainties – especially in energy infrastructure – are also prolonging deals. Across Europe, recurring surges in renewable generation pushed power prices into negative territory, driven by oversupply during peak production hours and limited grid flexibility or storage capacity. Even fully permitted, technically sound projects are being re-evaluated, as investors struggle to validate long-term returns and secure viable power purchase agreements.
Elsewhere, market volatility has prompted dramatic reversals in capital allocation. The cancellation of Ørsted’s Horsea 4 wind project – approved just eight months prior – highlights how inflation, rate pressures, and supply chain strain are making well-supported clean energy investments harder to justify.
In response, deal teams must conduct deeper scenario analysis, stress-testing pricing exposure, and reassessing grid-related assumptions. Investors are moving more cautiously, demanding stronger guarantees, more robust due diligence, and clearer ESG disclosures.
To overcome these challenges and maintain deal momentum, CFOs are increasingly turning to digital tools.
Modern virtual data rooms (VDRs) support real-time collaboration across teams and geographies, and AI integration helps surface risks buried in contracts and filings. ESG data tools, implemented with ERP systems, can also enable faster access to verified, auditable sustainability metrics.
Furthermore, advanced scenario-modelling tools can enable teams to simulate how energy prices, regulation, or grid constraints might impact long-term deal value. These tools don’t eliminate complexity – but they help make it more visible and manageable, giving CFOs greater control through a slower, more demanding cycle.
M&A remains a vital lever for growth, but the definition of a “successful” deal is changing. Today’s transactions are judged not just on financial return, but on efficiency, transparency, and alignment with evolving stakeholder expectations.
As a result, the CFO’s role is more strategic than ever. Leading through complexity now requires digital fluency, cross-functional coordination, and earlier integration of ESG factors.
Deals may be taking longer, but with the right tools and insight, CFOs have the opportunity to accelerate their deals and create more opportunities for value creation.