Solar Sector Corporate Funding Bounces Back In Q1

In the first quarter of this year (Q1’17), total corporate funding in the global solar sector increased to $3.2 billion – double the $1.6 billion total seen in Q4’16, according to Mercom Capital Group. In a new report, the clean energy communications and consulting firm says corporate funding in Q1’17 was about 15% higher year-over-year (YOY) compared with the $2.8 billion raised in Q1’16.

“Q1 funding levels were up in the solar sector from the 2016 lows, largely due to increased debt financing activity. Corporate funding never reached $3 billion in any of the quarters in 2016. [Mergers and acquisitions (M&A)] activity was also strong with several large deals. Solar public companies also had a good first quarter,” comments Raj Prabhu, CEO of Mercom Capital Group.

Solar Sector Corporate Funding Bounces Back In Q1

The report says global VC funding (venture capital, private equity and corporate venture capital) for the solar sector saw a 78% rise in Q1’17 with $585 million in 22 deals – compared with $329 million raised in the same number of deals in Q4’16. The amount raised was also higher YOY compared with the $406 million raised in 23 deals in Q1’16.

A large part of the VC funding in Q1’17 went to solar downstream companies, with $548 million raised in nine deals.

According to the report, top VC deals included the $200 million raised by ReNew Power Ventures, followed by the $155 million raised by Greenko Energy Holdings, the $125 million secured by Hero Future Energies, and then Silicon Ranch’s $55 million. A total of 23 VC investors participated in Q1’17.

Solar public market financing came to $461 million in 13 deals in Q1’17 – slightly lower compared with the $615 million (also in 13 deals) in Q4’16 but significantly higher compared with the same quarter of last year, when $94 million was raised in four deals.

Solar Sector Corporate Funding Bounces Back In Q1

Announced debt financing came in strong with $2.2 billion raised in 25 deals. In comparison, there were 10 deals in Q4’16 for a total of $610 million. YOY, $2.3 billion was raised in 19 deals in Q1’16. Most of the debt was raised by solar downstream companies.

In Q1’17, the report continues, Solar Mosaic raised $139 million through the first securitization of its residential solar loan portfolio at a 4.45% interest rate.

Announced large-scale project funding in Q1’17 remained steady with $2.6 billion in 33 deals, compared with $3 billion in 38 deals in Q4’16 and $1.4 billion in 24 deals in Q1’16.

The report says residential and commercial solar funds announced in Q1’17 dropped to $630 million in six deals, compared with $1.5 billion in eight deals in Q4’16. During the same quarter last year, $1 billion was raised in six deals. Of the $630 million announced in Q1’17, $500 million went toward the lease/power purchase agreement model and $130 million went to loan funds. A total of more than $23 billion has now gone into residential and commercial funds since 2009, the report notes.

There were 29 solar M&A transactions in Q1’17, compared with 20 transactions in Q4’16 and 14 transactions in Q1’16. Of the 29 total transactions in Q1’17, 20 involved solar downstream companies.

The report says there were 49 large-scale solar project acquisitions (18 disclosed for $1.9 billion) in Q1’17, compared with 73 transactions (23 disclosed for $2.1 billion) in Q4’16 and 50 transactions (22 disclosed for $1.2 billion) in Q1’16. About 7.4 GW of solar projects were acquired in Q1’17, compared with 5 GW in Q4’16.

The report says investment firms and funds were the most active acquirers in Q1’17, picking up about 21 projects totaling 2.8 GW, followed by project developers with nine transactions for 3.3 GW. Yieldcos had four transactions for 962 MW.

The report says Mercom tracked 233 new large-scale project announcements worldwide in Q1’17 totaling 12.7 GW.


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