Despite an overall drop in clean energy investment in the third quarter, Mercom has revealed total corporate funding for the solar sector grew in the third quarter to $3 billion.
Mercom Capital Group published its quarterly report on funding and merger & acquisition (M&A) activity for the solar sector for 2016 this week, revealing that total corporate funding increased to about $3 billion in Q3’2016, a 76% increase on the previous quarter.
A total of 45 deals were tracked across the quarter, compared to 32 deals in the second quarter — but the totals show the real story, with Q2 only seeing $1.7 billion compared to the third quarter’s $3 billion.
This might also come as a surprise, considering just yesterday we reported that Bloomberg New Energy Finance had found global clean energy investment had slumped to its lowest levels since the first quarter of 2013, reaching only $42.4 billion in the third quarter.
“Funding levels bounced back across the board compared to a weak Q2 but they are still well below last year’s totals,” said Raj Prabhu, CEO and co-founder of Mercom Capital Group. “The combination of slower than expected U.S. demand, the overcapacity situation coming out of China, and global hyper-competitive auctions leading to lower margins has affected the entire supply chain and most of the solar equities are in the red year-to-date. The exception has been the rebound of some of the yieldcos.”
Venture capital funding for the third quarter almost doubled over the second quarter, reaching $342 million over 16 deals, compared to only $174 million over the same number of deals in the previous quarter.
Solar downstream companies raised $273 million across 8 deals, the largest of which came from the $220 million deal raised by Solar Mosaic. Solar public market financing reached $880 million over 5 deals in the third quarter, including one IPO — BCPG, a solar downstream company, which raised $166 million. Debt financing reached almost $1.8 billion in the third quarter, across 24 deals, compared to only $1.3 billion over 12 deals in the second quarter.
The top large-scale project funding was the $397 million raised by Magnetar Capital to refinance its 135 MW UK solar projects portfolio. The remainder of the top 5 are seen below:
Residential and commercial solar funds raised in the third quarter reached $1.1 billion over 5 deals, compared to $1.36 billion over 11 deals in the preceding quarter. Of the $1.1 billion, $760 million went towards lease and $333 million went to loan funds. As a result, so far this year $3.5 billion has been raised across 22 deals — however, this doesn’t compare overly favorably with the same period in 2015, which saw more than $5 billion raised across 21 deals.
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