Mergers and acquisitions, knowledge base and technological trajectories. An exploratory study in the wind energy sector

ABSTRACT

The wind energy sector has increased its technological complexity for the last 20 years, with new technological and convergent domains like advanced materials, complex simulation, and artificial intelligence. In this context, mergers, and acquisitions (M&A) have become a key channel for companies in the sector to absorb new knowledge and develop complementary capabilities. The aim of this article is to trace the recent trajectory of the sector’s knowledge base and to analyze the role of M&A, specially of New Technology Based Firms in the generation of new capabilities through knowledge recombination. Using co-occurrence networks on a unique database of 1,299 companies in the wind sector and their acquired companies, we developed a methodological approach to investigate the trajectory of the wind sector at a global level. The empirical analysis verifies that acquisitions belonging to ‘unrelated’ sectors contribute significantly to the diversification and complexification of the sector’s knowledge base over time.

KEYWORDS:

• Mergers and acquisitions
• new technology-based firms
• technological trajectory
• wind energy
• network analysis

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 The estimated normalized cost of wind energy indicator (LCOE) contracted by 71% between 2009 and 2020 (an annualized rate of 11%), going from a range of US$ 101-169/MWh to US$ 26-54/MWh. This makes wind energy the most competitive of the renewable sources at present, even compared to other conventional energy sources, such as combined cycle gas. Information accessed at https://www.lazard.com, dated October 29, 2021.

2 The world has experienced an exponential growth in the annual installed capacity of wind energy, which multiplied more than 30 times, going from 24 GW to 743 GW between 2001 and 2020 (REN21 2021).

3 This includes everything from sensorization and the internet of things to computational modeling of complex systems such as atmospheric condition models and wind prediction and real-time information gathering and communication, and also the digitization of energy transport and distribution systems.

4 This concept is associated with energy systems that combine different technologies, such as solar PV and wind.

5 Based on data from the International Renewable Energy Agency (IRENA). Consulted in: https://www.irena.org/Energy-Transition/Technology/Wind-energy, dated 20 April, 2023.

6 In the case of pioneering companies, the acquisition of Enron Wind by GE Energy, NEG Micon by Vestas, Bonus by Siemens or Made by Gamesa stand out.

7 In China, the varied forms of internationalization included the acquisition of R&D companies (i.e. the German company Vensys by Goldwind), ‘greenfield’ investments of R&D departments (i.e. Goldwind and Envision in the Aarhus cluster, Denmark) and the creation of joint ventures (i.e. Shanghai Electric Windpower Equipment with leading companies Siemens Wind Power and ABB). In turn, Suzlon deployed an aggressive internationalization strategy starting in 2000, based on the acquisition of specialized European companies and the creation of R&D centers in Germany, Denmark and the Netherlands.

8 This companies were listed by several ranks, specialized websites and academic articles: ie: (i) The Wind Power Project (https://www.thewindpower.net/), (ii) USGS (https://eerscmap.usgs.gov/uswtdb/data/), (iii) Global Power Plant Database – WRI (https://datasets.wri.org/dataset/globalpowerplantdatabase), and (iv) Menezes et al. (2020)

9 Given the various forms of association between companies (acquisitions, mergers, joint ventures, etc.), it is worth clarifying that this base is made up practically entirely of acquisitions. It only registers three cases of mergers, among which the case of Siemens and Gammesa stands out.