Mercom Capital Group, a global clean energy communications and consulting firm, released its annual report on funding and merger and acquisition (M&A) activity for the solar sector in 2020.
Total corporate funding into the solar sector globally, including venture capital, private equity (VC), debt financing, and public market financing, came to $14.5 billion, a 24 percent increase compared to the $11.7 billion raised in 2019.
Publicly-traded solar companies had an unprecedented year. The solar ETF was up 225 percent, with 15 solar stocks up over 100 percent in 2020. Public market funding was also up with the help of several IPOs, and debt financing was up on the back of securitization deals.
“Solar asset acquisitions were at an all-time high in a pandemic year and have become more sought-after as an investment haven, especially in the uncertain COVID economy,” said Raj Prabhu, CEO of Mercom Capital Group.
Global venture capital and private equity funding in the solar sector in 2020 came to $1.2 billion in 41 deals, compared to $1.4 billion in 53 deals in 2019.
Of the $1.2 billion in VC/PE funding raised in 41 deals in 2020, $1.1 billion went to 27 Solar Downstream companies, which accounted for 90 percent of total VC funding in 2020. Solar Service Providers raised $61 million; PV companies raised $17 million; Balance of System (BOS) companies brought in $15 million; Thin-film technology companies raised $15 million, and Concentrator photovoltaics (CPV) companies raised $5.5 million.
The top VC funded companies in 2020 were Ayana Renewable Power, which raised $390 million, Silicon Ranch Corporation, which brought in $225 million, Brighte, which raised $76 million, Sunseap Group, which raised $72 million, and Aurora Solar and Zero Mass Water, each raising $50 million.
There were 102 VC and PE investors that participated in funding deals in 2020, with five involved in multiple rounds.
Public market financing was up 101 percent with $5.1 billion in 2020. Array Technologies raised $1.2 billion in its initial public offering (IPO) in the fourth quarter of 2020.
In 2020, announced debt financing came to $8.3 billion, a 6.4 percent increase YoY. Eight securitization deals totaling $2.2 billion were recorded in 2020, which was the largest amount of financing through securitization in a year.
The top investors in large-scale projects in Q4 2020 were Societe Generale, which invested in five projects. This was followed by Sumitomo Mitsui Banking Corporation, which invested in four projects. Credit Agricole, European Bank for Reconstruction and Development (EBRD), and Inter-American Investment Corporation (IDB Invest), each investing in three projects.
Sixty-two (62) Merger and Acquisition (M&A) deals were transacted in the solar sector in 2020 compared to 65 in 2019. Most of the transactions involved Solar Downstream companies. The largest transaction in 2020 was Sunrun’s acquisition of Vivint Solar, in an all-stock transaction for $3.2 billion.
There were 231 large-scale solar project acquisitions in 2020 compared to 192 transactions in 2019.
A record 39.5 GW of large-scale solar projects changed hands in 2020 compared to 26.1 GW in 2019. This was the largest amount of projects acquired in a single year to date.