Venture capital support for solar blossomed during the first half

The $800 million of private backing secured by Californian residential solar finance business GoodLeap helped the sector achieve VC and private equity funding of $1.6 billion in the first six months of the year, up from just $210 million a year earlier.

August 24, 2021

The first-half Solar Funding and M&A report published this week by Texan analyst Mercom Capital Group has offered further evidence of a bullish investment market for photovoltaics.

With the consultancy having recorded $210 million of venture capital and private equity backing across 14 solar deals in the first half of last year, the figure leapt up to $1.6 billion and 26 deals in the first six months of this year, with 14 arrangements worth a total $1 billion arriving in the January-to-March window.

That private backing was part of total corporate funding of $13.5 billion for solar from January to the end of June, up from $4.6 billion a year earlier, according to Mercom, with $8.1 billion committed in the first three months of the year.

The Austin-based consultant said Californian firms accounted for three of the five largest venture capital and private equity deals signed in the first half, with residential solar finance business Loanpal – now GoodLeap – having secured $800 million, and San Fran-based small-scale PV design software company Aurora Solar receiving $250 million. Oregon-headquartered zero-carbon power business Intersect Power banked $127 million, Indian distributed-solar company Fourth Partner Energy raised $125 million, and concentrated solar power entity Heliogen was the third Californian firm on the list, after receiving $108 million, according to Mercom.

Public stock market investors were equally keen on solar’s prospects, according to the report, with the $758 million raised in six public deals in the first half of last year rocketing to $3.7 billion across 13 transactions this time around, with eight of them – worth $2.8 billion – coming in the first three months of the year.

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Solar lending rose from $3.7 billion, in 13 credit lines, during the first half of 2020, to $8.2 billion across 32 loans in January-to-June this year, with $4.3 billion lent in 14 first-quarter arrangements.

Merger and acquisition activity is hotting up in the sector, according to Mercom, which observed 54 transactions in the first half of this year – 34 of them in the April-to-June window – up from 25 in the first half of 2020.

Big deals

And 135 large scale solar projects changed hands in the first half, with 14.6 GW of generation capacity bought in the first quarter and more than 24 GW in the last three-month period. Those figures compared with a Mercom total of 91 deals in the first six months of 2020, as 14.7 GW of capacity was sold.

In terms of fund announcements, Mercom reported $15.1 billion worth of new renewables-focused cash piles in the second quarter alone, and said two new residential and commercial solar funds were launched in the last quarter, after the first three months of the year had passed without any announcements.

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