Funding in solar business surges 54% to $18.5 bn in H1

Solar corporate funding H1 2023

Total corporate funding in solar business rose 54 percent to $18.5 billion in H1 2023 from $12 billion in 1H 2022. The number of deals in the solar industry fell 12 percent to 80 deals in 1H 2023 compared to 91 during the same period last year.

Total corporate funding includes venture capital (VC) funding, public market, and debt financing, Mercom Capital Group said in its report.

Corporate Funding:

Total corporate funding in the solar industry in 1H 2023 reached $18.5 billion, marking a significant increase of 54 percent compared to the previous year.

This growth in funding in the solar industry occurred despite a 12 percent decrease in the number of deals, with 80 deals in 1H 2023 compared to 91 in the same period in 2022.

The solar industry’s ability to maintain strong financial activity in the face of tightening financial market conditions and high interest rates is notable.

Venture Capital (VC) Funding:

Global VC funding for solar increased by 3 percent in 1H 2023, reaching $3.8 billion across 33 deals compared to $3.7 billion across 53 deals in 1H 2022.

Solar downstream companies led the financing activity, securing 17 deals worth $2.5 billion in 1H 2023.

The top VC deals in 1H 2023 included significant amounts raised by companies such as 1KOMMA5°, Silicon Ranch, CleanMax Solar, Amarenco, and Amp Energy India.

Public Market Financing:

Solar public market financing experienced substantial growth, totaling $6.7 billion across 14 deals in 1H 2023, a significant increase of 103 percent compared to $3.3 billion across 8 deals in 1H 2022.

Debt Financing:

Solar debt financing activity reached $8 billion across 33 deals in 1H 2023, showing a 60 percent increase compared to $5 billion across 30 deals in 1H 2022.

Securitization deals, a form of debt financing, increased by 36 percent YoY, raising $1.9 billion in 1H 2023.

M&A Activity:

Solar M&A transactions decreased slightly from 53 in 1H 2022 to 48 in 1H 2023.

The largest M&A deal in 1H 2023 was Brookfield Renewable’s acquisition of Duke Energy’s unregulated utility-scale commercial renewables business in the U.S. for approximately $2.8 billion.

The number of project acquisitions decreased from 148 in 1H 2022 to 116 in 1H 2023, with a total capacity of 25.5 GW compared to 37.8 GW in the previous year.

Solar Project Acquirer Mix:

Project developers and independent power producers (IPPs) were the most active acquirers, with 5.5 GW of solar projects in Q2 2023.

Utilities followed closely, acquiring 3.9 GW of solar projects, while other entities such as insurance companies, pension funds, energy trading businesses, industrial conglomerates, IT firms, oil and gas companies, and investment firms acquired varying capacities.

Overall, the report highlights a positive trend in the financial activity of the solar industry in 1H 2023, with increased funding despite a decrease in the number of deals. The solar sector continues to attract VC interest, and both public market financing and debt financing experienced substantial growth. However, M&A activity declined slightly, and the number of project acquisitions also decreased compared to the previous year.