Looking at the first half of 2025 and beyond, one thing is becoming clear – Cleantech is at the centerstage of corporate M&A. What was once a speculative play on the future has become a core pillar of institutional and private equity portfolios The global shift toward sustainability, energy independence, and net-zero commitments is fundamentally reshaping capital flows, M&A strategies, and corporate portfolios. The smart money – sovereign funds, growth investors, and forward-looking conglomerates – is converging on one thesis: clean tech isn’t just good for the planet; it’s great for business.

According to the International Energy Agency¹, total global energy investment is projected to hit $3.3 trillion, with a historic $2.2 trillion set to pour into clean technologies—eclipsing traditional oil and gas investment for the first time. Of this, solar PV is capturing half the capital allocation followed by battery storage, grid modernization and low-emission fuels.

In light of the above, there are two broad themes that emerge that are expected to dominate the Cleantech M&A in the near future:

• Corporate divestitures that accelerate cleantech adoption: Large traditional fossil-fuel-based energy conglomerates are divesting carbon-intensive assets, reallocating capital into renewables and adjacent infrastructure businesses. GE and Siemens are examples of global conglomerates which are pouring massive resources into cleantech.
• Renewable asset M&A to get hotter: The second half of 2025 is likely to be defined by active portfolio rebalancing as EU&R companies pursue divestitures and strategic consolidations to unlock value and fund the next wave of electrification, decarbonisation and digital infrastructure. While deal volume in H1 2025 fell by 2% as compared to 2024, in EU&R sector, deal values increased by approximately 30%, with nine deals larger than US$ 5 B, the largest amongst them being Constellation Energy’s $26.6 B acquisition of Calpine to create the largest clean-energy provider in the US signalling continued investor appetite for scale in low-carbon generation.

Corporate Carve-Outs: The New Clean Tech Deal Flow

One of the biggest clean tech deal themes of 2025 is corporate divestitures. Large conglomerates are spinning off or selling non-core, carbon-intensive businesses while pivoting toward green tech platforms. This is creating a fertile hunting ground for private equity and strategic buyers.

Examples:

• Siemens Energy² carved out its fossil fuel assets to focus on hydrogen and renewables, sparking interest from climate-focused funds.
• Tata Group³ has begun separating out its legacy thermal power business while ramping investments in Tata Power Renewables, which plans to add 10 GW of solar and wind capacity by 2030.
• GE Vernova⁴, formed from GE’s energy businesses, has become a clean tech platform of its own—acquiring startups in smart grid and battery storage.

Carve-outs offer two advantages: they unlock trapped value for the seller while giving buyers a de-risked, operational business with room for clean energy upgrades. The rationale behind these divestitures is multifaceted. Faced with pressure from shareholders, evolving market demands, and the need for greater agility, conglomerates are shedding assets that may be profitable but do not align with their core mission or long-term growth objectives. By divesting, parent companies can concentrate resources on their most promising ventures, reduce organizational complexity, and improve capital efficiency.

For the divested entity, a carve-out often means liberation from corporate bureaucracy, allowing it to pursue its own growth trajectory with dedicated management and capital. This process creates a pipeline of mature, operational businesses ripe for new ownership.

The Convergence: Why It’s “Smart Money”

The true genius of “smart money” in 2025 lies in recognizing the powerful synergy created when corporate carve-outs meet the clean technology boom. Instead of speculative greenfield projects, investors are now angling for established, operational clean energy assets or businesses that have been spun out of larger, often well-capitalized, corporations.

This convergence offers several compelling advantages for investors:

• Established Operational Assets: Unlike early-stage clean tech ventures, carve-outs often involve mature assets with proven technologies, existing customer contracts, and predictable cash flows, derisking development and operations significantly.
• Deal Clarity:  Since carve-outs have historical data and operational track record, investors have a clarity of past performance leading to more informed valuations and risk mitigation of investment decisions.
• Value Creation Potential: Carve-outs present an opportunity to Pes to optimize processes and improve efficiencies that might have been overlooked in the earlier entity. The resultant growth opportunities could lead to integration with a larger platform realizing further economies of scale and cross-selling opportunities.
• Strong ESG Alignment: Investing in clean tech carve-outs directly addresses the increasing demand from limited partners and stakeholders for investments with positive ESG impact. This alignment not only attracts capital but also enhances the investor’s reputation and long-term sustainability profile.

Caveat Emptor

While the outlook for carve-outs in clean tech is overwhelmingly positive for 2025, challenges remain. Successfully integrating newly acquired assets, navigating complex regulatory landscapes that vary by region, and ensuring the retention of key talent from the divested unit require meticulous planning and execution. Valuation complexities, especially for assets with unique technological components or nascent market positions, also demand sophisticated financial modeling.

As corporations continue to refine their core strategies and the global imperative for sustainable energy intensifies, the flow of “smart money” into clean tech carve-outs is set to define a significant portion of the M&A landscape in 2025 and beyond. This convergence represents a powerful mechanism for unlocking value, accelerating the energy transition, and delivering compelling returns in a wo

1. https://www.iea.org/news/global-energy-investment-set-to-rise-to-3-3-trillion-in-2025-amid-economic-uncertainty-and-energy-security-concerns

2. https://www.siemens-energy.com/global/en/home/publications.html

3. https://www.tatapower.com/renewables

4. https://www.enlit.world/generation/how-a-startup-mentality-is-re-energising-ge-vernova/#:~:text=GE%20Vernova%20Inc%20was%20formed,mindset%20of%20a%20start%2Dup