Solar public market funding rose to $1.8 billion across 14 deals compared with $1 billion raised across 23 deals during the same period in 2017, according to Mercom Capital Group. At the same time, large-scale project funding announced during the first three quarters of 2018 crossed $11 billion for the development of 137 projects.
The top venture capital deal in the third quarter of 2018 was the $200 million raised Cypress Creek Renewables. It was followed by Nexamp’s $54 million, Cleantech Solar’s $50 million, Arcadia Power’s $25 million, and the $10 million raised by Pegasus Solar. A total of 25 VC investors participated in solar funding in the third quarter of 2018, Mercom reports.
While these finance segments rose during the period, debt financing activity declined by almost 21% to $4 billion in 40 deals compared to the same period in 2017 when $5.1 billion was raised in 51 deals, Prabhu notes.
Not surprisingly, the debt financing decline was accompanied by a rise in solar mergers and acquisitions during the period. During the first nine months of 2018 a total of 64 solar M&A transactions took place, compared to the 59 transactions during the comparable 2017 period. Of the 18 total transactions in during the 2018 period, nine involved solar downstream companies, six involved BOS companies, two were with service providers, and one was with a module manufacturer, Mercom statistics indicate.
“Decline in solar demand around the globe has had a strong effect on corporate financing activity in solar especially with most solar company stocks in the negative territory at the end of the third quarter. M&A activity on the other hand has remained robust especially project acquisitions,” said Prabhu.
Project acquisition also rose during the 2018 period. There were 166 large-scale project acquisitions during the 2018 period with aggregate capacity of over 23.6 gigawatts (GW), compared to 161 project acquisitions totaling 14.6 GW during the 2017 period.
Project developers were the most active acquirers during the third quarter of 2018, purchasing 22 projects totaling 8.5 GW, followed by investment firms with 21 projects totaling 2.86 GW. Mercom reports.
Residential, commercial, and industrial solar funding also declined in the comparison. Residential and commercial solar funds totaled $1 billion during the 2018 nine month period, compared with $2.2 billion raised during the same period of 2017.
While the investment during the three months of 2018 was substantial, the total is roughly one-quarter of the investment made during the same three months of 2014, Mercom statistics show. Part of the decline in US solar investment has resulted from the market insecurity that surrounded the renewal of the federal tax credit program. Additional slowdowns have been attributed to import tax policy on foreign solar panels, and the current U.S. trade war with China.
The $200 million third-quarter 2018 deal with developer and portfolio owner Cypress Creek Renewables, and Singapore government investment company Temasek, yielded Temasek an aggregate of preferred stock and warrants up to 10 percent stake of the common stock of Cypress Creek. The funds will support the latter’s continued growth through investment, maturation, and monetization of its development portfolio, the company said at the time.
By the end of 2018 Cypress Creek will have developed and placed-in-service over 3.2 GW of projects and own 1.7 GW on-balance sheet, the company says.
“Temasek has shown itself to be a patient, forward-looking partner focused on generating sustainable long-term returns – and it is this shared vision that makes expansion of our relationship quite natural” said CEO Matt McGovern, CEO of the Research Triangle Park, NC.-based company. Temasek’s website indicates the organization has a $275 billion portfolio.
Singapore is not the only large Asian investor broadening its exposure in the U.S. solar market. Last year, China’s state energy agency announced plans to invest $360 billion in renewables including solar by 2020. While much of the China spending on solar is within that country, more investment in US solar manufacturing is taking place now. China is also spending more in other Asian countries on solar manufacturing for export to the United States to avoid US import taxes on Chinese solar goods.