State-owned enterprises are selling off residential photovoltaic assets— who will be the buyers?

To answer the above question, we must first clarify whether Narantai was abandoned due to excessive inefficiency. The announcement cites a 1.8% return on net assets (RONA)—how inefficient is that? Here, it’s important to distinguish a key concept: RONA is not the same as the conventional ‘rate of return’ we commonly refer to. RONA has multiple calculation methods but can broadly be understood as the ratio of net profit to net assets. It is primarily used to measure a company’s overall profitability and is applied in corporate-wide financial analysis. Moreover, it is typically an annual metric, reflecting profitability at a point in time or over a fiscal year. In contrast, the ‘rate of return’ historically referenced usually means the internal rate of return (IRR), which is employed mainly for feasibility analysis of individual investment projects—especially common in capital budgeting and project evaluation. IRR is a long-term metric that accounts for all cash flows across the entire project lifecycle. Put simply: one is calculated annually and reflects investor returns; the other is a long-horizon indicator reflecting the project’s total cash generation capability. So where does a 1.8% RONA stand—and is it truly low enough to warrant mandatory divestment? In April this year, DPI Energy issued its ‘Announcement on Termination of Residential PV Projects by Subsidiaries’, stating that, to safeguard project economic viability and maximize value, it would terminate two residential photovoltaic projects—including the Shandong project overseen by Narantai. The Narantai project being sold features the following fundamentals: construction of the 100 MW Shandong residential PV project commenced in August 2021, with a total investment of RMB 380 million and an equity IRR of 10%. As of April this year, the project had completed installations for 390 households, totaling 9.9919 MW. Even upon termination, the project’s equity IRR remained as high as 9.40%, far exceeding that of typical residential PV projects. From the project’s perspective, perhaps significantly delayed construction progress led to insufficient cash flow generation, thereby dragging down its RONA. This explains why—though the project’s initial equity IRR was calculated at 10%, its 2023 RONA stands at only 1.8% today. The project continues generating solid cash flow, yet returns to its shareholder, State Power Investment Corporation (SPIC), remain modest. This very gap preserves the project’s transactional value: if another enterprise successfully advances the project, substantial returns remain attainable. However, SPIC’s consecutive moves regarding residential PV assets have led market participants to interpret them as signaling abandonment of such assets due to poor returns. In recent years, rising investment costs for residential PV systems have eroded project economics. Escalating land and rooftop lease fees directly depress project returns; continuing construction of this project no longer meets the company’s required return thresholds. Additionally, local residential PV policies have dampened farmers’ willingness to cooperate—reducing their enthusiasm for joint development. All these issues directly impair project returns—and are difficult to resolve. Moreover, residential PV power station revenues are trending downward. The newly effective ‘Regulatory Measures for Full Guaranteed Purchase of Renewable Energy Electricity’, implemented on April 1, 2024 (hereinafter the ‘Regulatory Measures’), has further worsened the situation for residential PV. Previously, China enforced a full guaranteed purchase policy for renewable energy generation.

Top-tier international financial consortia: Clean energy asset M&A transactions are expected to rebound in 2026.

Bloomberg data shows that the average premium for M&A transactions involving renewable energy companies dropped to approximately 12% in 2025, down sharply from 46% in 2024. Two main factors account for this decline: First, the high valuation expectations formed during prior years of low interest rates have become markedly misaligned with investors’ capital return requirements under the current high-interest-rate cycle (2024–2025). Second, policy uncertainty, trade tensions, and adjustments to subsidy mechanisms have prompted many potential buyers to adopt a ‘wait-and-see’ stance—preserving liquidity instead of committing capital. As Joost Bergsma, Global Head of Clean Energy at Nuveen Infrastructure, put it: ‘Over the past two years, the market hasn’t rejected clean energy assets per se—it has collectively chosen to hold back, keeping funds in the war chest.’ Yet this dynamic may soon reverse. Recently, executives from J.P. Morgan, Brookfield Asset Management, and Nuveen Infrastructure noted that emerging electricity demand drivers—particularly data centers—are providing fresh support for renewable energy. Meanwhile, uncertainties surrounding energy policy, tariffs, and interest rates have eased relative to a year ago—paving the way for a new wave of project-centric transactions. Over the past year, asset owners struggled to sell projects—but they are now increasingly willing to lower price expectations. At the same time, buyers are beginning to pay reasonable premiums for clean energy generation assets. ‘We expect M&A activity for renewable energy assets to increase notably in 2026, with developers—or sellers of projects or companies—adopting more realistic valuations,’ said Greg Zdun, J.P. Morgan’s Asia-Pacific Head of Energy Transition & Natural Resources. Joost Bergsma of Nuveen Infrastructure added: ‘We are now gradually seeing renewed confidence, and the exit market in the clean energy sector is becoming smoother.’ Bergsma said. Nuveen is currently negotiating the sale of European wind assets with prospective buyers. The International Energy Agency (IEA) forecasts that by 2035, renewable energy—especially solar—will become the world’s fastest-growing source of electricity. This trend is driven by a projected global electricity demand increase of at least 40%, fueled primarily by surging consumption from data centers, electric vehicles, and air conditioning. The S&P Global Clean Energy Transition Index has risen nearly 6% year-to-date, building on its 44% surge in 2025.

Galp Said to Weigh Sale, Partner for Renewable Energy Assets

18 hours ago

Portuguese oil major Galp Energia is exploring options to sell or partner on its 2.7-gigawatt renewable energy portfolio, mirroring recent restructuring activities by European peers like TotalEnergies and EDP Renewables.

bloomberg

2026-10-02

Galp Said to Weigh Sale, Partner for Renewable Energy Assets

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