بازار در گرو بهره وری در ارزش نهادن به آب و برق؛ مورد شرکت های تولید نروژی

After deregulation of the energy market in Norway, a number of mergers and acquisitions of hydropower generating companies have taken place. However, valuation of these companies has proved controversial. From an ex-post perspective, there is support for the criticism that generation assets have been sold too cheaply. This article presents a simple valuation model providing evidence of how value has evolved. On the basis of these results, we discuss the valuation from an ex ante perspective and in the light of the market efficiency hypothesis of Fama, 1970 and Fama, 1991.

The sales of shares in Norwegian hydropower generation companies have sparked significant controversy. Several public owners (municipalities and counties) have in the post-deregulation period (after 1991) sold off their shares, capitalizing values in power generation assets in order to finance immediate public services. These transactions have been criticized by several commentators, both politicians and others, claiming that the assets have been sold too cheaply. The rapid increase in electricity prices has shown severe undervaluation, ex post, of companies sold before the electricity price shock occurring in the fall of 2002. In response to such accusations, sellers have claimed the presence of market efficiency and pointed out that the agreed price thus reflected the information available at the time of the negotiations. This article analyzes the transactions of generation companies in order better to understand the transaction values, and hence assess whether there has been a lack of market efficiency thus supporting the criticism of sellers. The study is supposed to be performed in the light of the literature on market efficiency and valuation, particularly applied to the energy sector. Transaction data and accounting data enables us to understand how generation assets have been valued, and hence give a foundation for discussing and commenting on the presence or lack of market efficiency; i.e. whether the prices have fully reflected information available and relevant risk at the time of the transactions.

Blocks of shares in generation companies have indeed been sold too cheaply—from an ex-post perspective. Observed spot as well as forward prices clearly tell that sellers have not been fully compensated in a number of cases. The agreed prices some years ago surely reflected common expectations of future electricity prices at the time of the negotiations. Moreover, they were also surely calibrated against peer transactions. However, this in turn led to a kind of circularity, and hence, the prices did just reflect historical information and not fully what, according to the previous discussion, was available information for all participants at the time of the transactions. Therefore, there are arguments for claiming that the market efficiency hypothesis only applied in a weak form. Sellers concluded some bad deals, whereas buyers did the opposite. The above can be elaborated by looking at two additional aspects, supporting the supposition that hydropower generation assets were sold too cheaply. Firstly, one can mention the ignorance of the possibility of rising electricity prices and the fact that renewable generation would benefit in more environmental conscious markets. This means that there was a lack of understanding concerning long-term price development. One should have foreseen that renewable energy sources would become more valuable beyond a time horizon of 3–4 years. The analysis in this article shows that misleading historical performance has provided the basis for valuation estimates. It brings, however, little comfort to sellers that this was the general situation at the time. Consequently, the market has only functioned efficiently in a weak form. Secondly, it seems that valuation of generation asset has been overly based on the relative valuation approach: price per kWh yearly capacity. The consequence of this is too little emphasis on expected price development and fundamental values. This criticism tallies with other studies concerning relative valuation ( Bhoraj and Lee, 2002). Relative valuation is easy to perform, but is less precise and may well include pitfalls. There have been considerably less transactions during recent years. However, there is still a need for qualified valuation of generation assets. Volatile electricity prices will always pose challenges for value estimates in this industry. This study demonstrates the necessity of supplementing traditional intrinsic and/or especially relative valuation. The study may be used in favor of scenario analysis or real option approaches in valuation (Koller et al., 2005; Schwartz and Trigeorgis, 2001). Scenario analysis allows for probability-adjusted expected values of future income based on volatile electricity forward prices. Real option valuation includes the value of flexibility by e.g. the expansion of existing plants. Hence one could capture the value of adapting to new information when available in the future. This is probably the best way of valuing generation assets, bearing in mind the great uncertainty attached to the future price of electricity.