The total corporate funding for the solar sector including venture capital funding, public market, and debt financing, in the first half of 2022 stood at $12 billion, which was 11 per cent lower compared to the $13.5 billion raised in 1H 2021, according to a report by Mercom Capital Group.
“The current state of the economy —inflation, higher interest rates, supply chain issues — has started to impact fundraising in the solar sector. Even though the first half numbers held up, there was a pronounced slowdown from Q1 to Q2. Besides venture and private equity funding, all other areas experienced a decline in financing activity,” said Raj Prabhu, CEO, Mercom Capital Group.
Public market financing
Solar public market financing in 1H 2022 came to $3.3 billion in eight deals, 10 per cent lower compared to $3.7 billion in 13 deals in 1H 2021. Announced solar debt financing activity in 1H 2022 ($5 billion in 30 deals) was 39 per cent lower compared to the first half of 2021 when $8.2 billion was raised in 32 deals.
In 1H 2022, five securitisation deals totaled $1.4 billion, a 26 per cent decrease compared to $1.9 billion raised in seven deals in 1H 2021. Cumulatively, over $12 billion has been raised through securitisation deals since 2013.
Venture capital
In H1 FY22, venture capital funding activity rose 125 per cent with $3.7 billion in 53 deals compared to the $1.6 billion raised in 26 deals in the first half of 2021.
Of the $3.7 billion raised in VC funding, 89 per cent went to solar downstream companies, with $3.3 billion in 39 deals. The top VC deals in 1H 2022 were: Intersect Power - $750 million, Palmetto -$375 million, Agilitas Energy - $350 million, Sun King - $260 million, Guangdong Gaojing Solar Energy Technology- $251 million, and Ignis - and $237 million.
Merger and acquisition
In 1H 2022, a total of 53 solar M&A transactions were made compared to 54 transactions in 1H 2021. The top deal was by Macquarie Asset Management, a consortium with British Columbia Investment Management Corporation (BCI) and MEAG, which acquired Reden Solar from InfraVia Capital Partners and Eurazeo for an enterprise value of $2.72 billion.
There were 148 project acquisitions for 38 gigawatts (GW) of solar projects compared to 136 project acquisitions totaling 40 GW last year.
Mercom Capital Group, a global clean energy communications and consulting firm, released its report on funding and M&A activity for the solar sector in the second quarter and the first half of 2022.