Published on January 9th, 2019 | by Charles W. Thurston0
Solar Investment At $9.7 Billion Globally In 2018
January 9th, 2019 by Charles W. Thurston
Public market financing in solar was up in 2018, while private financings were down, with a net result of $9.7 billion invested in solar last year.
Total global corporate funding in the solar sector, including venture capital and private equity, debt financing, and public market financing, came to $9.7 billion in 2018, a 24% drop compared to the $12.8 billion raised in 2017, according to Austin-based analysts Mercom Capital Group. In the same time period, public market financing increased in 2018 to $2.3 billion raised in 21 deals from $1.7 billion raised in 33 deals in 2017.
Mercom identifies public market financing as banks and other traditional lending institutions open to business with the public.
One of the strongest trends in 2018 solar financing was the sell-off of large solar projects by developers and other early investors, to portfolio and other secondary investors. This process often leaves the developer cash-fluid and promotes new development.
“2018 was a year filled with uncertainties which started with Section 201 tariffs followed by an announcement from China that it was capping installations and reducing its feed-in-tariff. More bad news came from India which imposed safeguard duties on imports,” comments Raj Prabhu, CEO and Co-Founder of Mercom, a global clean energy communications and consulting firm. “Uncertainty stemming from the three largest solar markets in the world was reflected in equities of publicly-traded solar companies as well as fundraising activity during the year,” he says.
The solar sector set a record in 2018 for project acquisitions with 29 GW compared to the 20.4 GW in 2017. There were 218 large-scale solar project acquisitions (54 disclosed for $8.4 billion) in 2018 compared to 228 transactions (92 disclosed for $8.3 billion) in 2017.
“About 100 GW of large-scale projects have been acquired since 2010, a reflection of how far solar has come as an asset class. Quality solar projects are now a mature, attractive investment opportunity around the world,” added Prabhu.
Venture Capital Funding Drops
Within the scope of corporate funding, global VC funding for the solar sector in 2018 fell 18% to $1.3 billion in 65 deals, compared with $1.6 billion raised in 99 deals in 2017, Mercom reports. Of the $1.3 billion in VC funding raised in 65 deals in 2018, $1.2 billion went to 50 downstream solar, which comprised 91 percent of the total VC funding in 2018.
VC funding into PV technology companies came to $37 million, and service providers raised $28 million. Investments into balance of system (BOS) companies totaled $25 million, followed by thin-film companies with $25 million, and concentrator Photovoltaics (CPV) companies raised $2.4 million, Mercom details.
The top solar VC funded companies in were: 2018 Cypress Creek Renewables which raised $200 million; GreenYellow with $174 million; followed by Amp Solar with $154 million; Wunder Capital with $112 million; and Sunnova Energy with $100 million.
There were 87 VC or private equity investors that participated in funding deals in 2018, with four involved in multiple rounds: Box Group, Energias de Portugal (EDP), GAIA Impact Fund, and New Energy Capital Partners.
Public Market Funding Rises
Public market financing increased in 2018 to $2.3 billion raised in 21 deals from $1.7 billion raised in 33 deals in 2017, Mercom reports.
In 2018, announced debt financing fell 36% with $6 billion in 53 deals, compared to $9.5 billion raised in 74 deals during 2017. There were five securitization deals totaling $1.4 billion, slightly higher than the $1.3 billion in 2017, the analysts said.
Large-scale project funding announced in 2018 came to $14 billion in 182 deals, similar to the $14 billion raised in 167 deals during 2017. A total of 182 investors funded about 15 gigawatts of large-scale solar projects in 2018 compared to 20.5 GW funded by 161 investors in 2017.
The top investors in large-scale projects included the European Bank for Reconstruction and Development (EBRD), which invested in 16 projects, followed by the Dutch development bank FMO with seven deals, and Natixis with six deals.
Mergers And Acquisitions Up
Merger and acquisition activity in the solar sector increased with 82 transactions in 2018 compared to 72 transactions in 2017. 60% of the transactions involved solar downstream companies, with 49 transactions.
Engie acquired four companies while AlsoEnergy was involved in three M&A transactions, Global Infrastructure Partners (GIP), Shell, and F2i acquired two companies each.
The largest and most notable transaction in 2018 was the $5 billion acquisition of Equis Energy by Global Infrastructure Partners (GIP) – through its Global Infrastructure Partners III Fund, in conjunction with Canada’s Public Sector Pension Investment Board and CIC Capital.