Global Corporate Solar Sector Funding Falls 24 Percent in 2018
Credit: Mercom Capital Group
- January 12, 2019
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Global corporate funding in the solar energy sector -- venture capital (VC), private equity (PE), debt and public market financing -- dropped a sharp 24 percent year-over-year in 2018, from 2017's $12.8 billion to $9.7 billion, according to Mercom Capital Group.
Uncertainties in the world's three biggest solar energy markets -- China, the U.S. and India -- fueled the decline in solar companies' capital raising, as well as volatility in the shares of publicly traded solar companies, highlighted Mercom co-founder and CEO Raj Prabhu.
“2018 was a year filled with uncertainties which started with Section 201 tariffs followed by an announcement from China that it was capping installations and reducing its feed-in-tariff. More bad news came from India which imposed safeguard duties on imports," Prabhu said for a press release.
There were some bright spots, however. Project acquisitions reached a record high in terms of capacity in 2018 -- 29 gigawatts (GW) worth. Mercom registered 218 large-scale solar project acquisitions for the year as compared to 228 (total capacity 20.4 GW) for 2017. Fifty-four valued at $8.4 billion of 2018's total were disclosed, according to Mercom's 2018 Q4 and Annual Solar Funding and M&A Report.
“About 100 GW of large-scale projects have been acquired since 2010, a reflection of how far solar has come as an asset class. Quality solar projects are now a mature, attractive investment opportunity around the world,” Prabhu commented.
2018 Global VC and PE solar-sector investments
Solar energy companies raised $1.3 billion from VC investors in 65 deals globally last year, according to Mercom's report. That's down 18 percent from $1.6 billion raised in 99 deals in 2017.
Fifty downstream solar companies accounted for $1.2 billion, or 91 percent, of the total solar-sector companies raised from VC investors globally last year. PV technology companies raised $37 million, while service providers raised $28 million.
In addition, VC investors plowed $25 million into balance-of-system companies and another $25 million into solar thin-film companies. Concentrator solar PV companies raised $2.4 million from VC investors last year, according to Mercom.
All told, 87 VC and PE investors participated in funding deals in 2018. Four were involved in multiple deals. Among them were Box Group, Energias de Portugal (EDP), GAIA Impact Fund and New Energy Capital Partners.
U.S.-based community-centered solar investment specialist Cypress Creek Renewables raised $200 million from VC investors in 2018. France's downstream solar and cleantech specialist YellowGreen raised $174 million, while Toronto, Canada clean energy infrastructure provider Amp Solar raised $154 million.
Boulder, Colorado's Wunder Capital, which specializes in commercial solar financing, raised $112 million. Houston-based residential solar-plus-storage specialist Sunnova raised $100 million, according to Mercom's latest annual report.
Solar-sector public and debt markets financing, M&A
Turning to public markets financing, solar-sector companies globally raised $2.3 billion of capital in 21 deals. That's up 35 percent as compared to $1.7 billion raised in 33 deals in 2017, according to Mercom's count.
Totaling $6 billion across 53 deals, solar-sector debt financing dropped 36 percent globally year-over-year in 2018 as compared to $9.5 billion raised in 74 deals in 2017. Five of 2018's total involved asset securitization valued at a total of $1.4 billion. that was slightly higher than $1.3 billion in 2017.
A total of 182 investors participated in 183 large-scale solar project funding deals globally for a total of 15 GW and $14 billion in 2018, according to Mercom. That compares to 161 investors investing $14 billion in 167 deals to fund 20.5 GW of large-scale solar projects in 2017.
The European Bank for Reconstruction and Development (EBRD) was the most active, investing in 16 projects. Netherlands development bank FMO invested in seven, while Natixis invested in six.
Another indicator of the solar sector maturing as an asset class, M&A activity increased year-over-year in 2018. Mercom tracked 82 solar-sector M&A deals for 2018 as compared to 72 for 2017.
Forty-nine, or 60 percent, involved acquisitions of downstream solar companies. France's Engie acquired four downstream solar companies last year. Boulder, Colorado-based solar energy system analytics and monitoring specialist AlsoEnergy acquired three and Global Infrastructure Partners (GIP), Shell and Italy-based infrastructure development specialist F2i each acquired two.
GIP, Canada's Public Sector Pension Investment Board and CIC Capital's $5 billion acquisition of Equis Energy was the largest solar-sector M&A deal, according to Mercom's report.