Total corporate funding, including venture capital (VC) funding, public market and debt financing, into the solar sector in the first quarter of this year (Q1’16) dropped to $2.8 billion compared with $6.9 billion in Q4’15 – a decline of about 59% quarter-over-quarter, according to a new report from Mercom Capital Group. Year-over-year, total corporate funding was down compared with $6.4 billion in 64 deals in Q1’15.
“It’s a tough environment out there,” comments Raj Prabhu, CEO of Mercom Capital Group. “Solar public companies in general have had a difficult time raising capital at depressed market valuations. Yieldcos, which accounted for significant financial activity in the debt and public markets last year, have faded this quarter. On the bright side, VC funding held up well, securitization deal activity picked up and residential/commercial funds raised a billion dollars in Q1.”
The report says global VC funding for the solar sector came in at $406 million in 23 deals compared to $457 million raised in 17 deals in Q4’15. Year-over-year, VC funding was up compared to Q1’15 when $195 million went into 27 deals.
Most of the funding in the first quarter of this year went to solar downstream companies, with $333 million in eight deals. The report says the $300 million raise by Sunnova Energy accounted for most of the total.
The next largest deal was TenKsolar with a $25 million raise. PosiGen raised $20 million, and Mercatus brought in $11.7 million. Completing the top five was NexWafe (a spinoff of Fraunhofer), which raised $6.7 million. A total of 20 VC investors participated in Q1’16.
According to the report, public market financing activity fell of the cliff in the quarter, with only $94 million raised in four deals compared to $605 million in eight deals the previous quarter and $1.3 billion in 10 deals in Q1’15. There were no initial public offerings Q1’16, compared to three in Q4’15.
Announced debt financing also fell sharply in Q1’16 with just over $2.3 billion in 19 deals. By comparison, $5.8 billion was raised in 27 deals in Q4’15 and $4.9 billion was raised in 25 deals in Q1’15.
The report says securitization deals continued to gain momentum, with $387 million in three deals in the quarter. Securitization deals in solar have now surpassed $1 billion globally.
According to the report, the top five large-scale project funding deals included the $250 million secured by ReNew Power Ventures for 400 MW of new solar projects across India. Recurrent Energy raised $180 million for the 75 MW Astoria 2 solar power project located in Kern County, Calif. Samsung Renewable Energy and Connor, Clark & Lunn Infrastructure secured $136 million for their 50 MW Southgate solar project located in Ontario, Canada. The Marguerite Fund brought in $120 million to fund its 36 MW Toul project in Lorraine, France. Rounding out the top five, SunPower secured a $115.5 million loan for its 54 MW Rosamond I solar project located in Kern County, Calif.
Funding continued to pour into residential and commercial solar funds for leases/power purchase agreements, with $1 billion in six deals announced in Q1’16 compared to the $650 million in three deals in Q4’15. Since 2009, approximately $18 billion has gone into residential and commercial funds.
There were 14 solar merger and acquisition (M&A) transactions in the quarter compared to 13 transactions in Q4’15. Nine of the M&A transactions in Q1’16 involved solar downstream companies.
Project acquisition activity held steady in the quarter with 50 transactions; about 2.4 GW of solar projects were acquired in Q1’16. In comparison, there were 52 transactions in Q4’15, with roughly 3.3 GW of solar projects acquired, and 44 transactions totaling 2 GW in Q1’15. Project acquisitions by yieldcos dropped to 234 MW in Q1’16 compared to 483 MW last quarter.
The report says the quarter’s largest project acquisition by dollar amount was the $227 million acquisition of the 132 MW Alamo 7 solar project in Texas by ConEdison Development from OCI, a Korean chemical company. Bluefield Solar Income Fund acquired a portfolio of six solar PV projects totaling 104.5 MW for $189 million from Primrose Solar Management. Kong Sun Holdings made six project acquisitions in the quarter. The largest of these was the $136 million acquisition of Dingbian Ang’Li Photovoltaic Technology for its 100 MW solar project located in Shaanxi Province, China. Masdar acquired Shams-1, a 100 MW solar thermal project in Abu Dhabi, from Abengoa for $110 million. BCPG Co., a subsidiary of Bangchak Petroleum, acquired SunEdison’s portfolio of Japanese solar assets totaling 198 MW for $81 million.
For more information on the report is available here.