(Bloomberg) -- KKR & Co. is considering an acquisition of Albioma SA, a French producer of solar and biomass power, as it seeks to expand in renewable energy, people familiar with the matter said.

The private equity firm is in the early stages of discussing a potential bid for Albioma, according to the people, who asked not to be identified because the information is private. Albioma has a market value of about 1.1 billion euros ($1.2 billion). 

Renewable energy firms are in high demand amid the global shift to better environmental standards. The European Renewable Energy Index has gained 18% from a low in late February as the Russian invasion of Ukraine focuses investors’ minds on the rising need for energy alternatives.

Albioma could also attract interest from other private equity and infrastructure investors, as well as oil and gas producers seeking to boost their exposure to renewables, the people said. Deliberations are ongoing, and there’s no certainty they will lead to a transaction, the people said. 

Representatives for KKR and Albioma declined to comment.

Global spending on the transition to low-carbon energy rose by more than a quarter to $755 billion in 2021, according to BloombergNEF. Deals included a JPMorgan Chase & Co. fund’s takeover of Falck Renewables SpA valuing the Italian energy firm at nearly $3 billion. This week, a consortium led by Macquarie Group Ltd. agreed to acquire French solar farm developer Reden Solar SAS for an enterprise value of 2.5 billion euros. 

Shares of Albioma have fallen about 17% in the last 12 months as the cost of renewable energy projects rises and the French government trims some subsidies. The stock has also been hit by its removal from a key S&P Dow Jones clean energy index. 

Read more: Energy Transition Drew Record $755 Billion of Investment in 2021

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