Total corporate funding in the solar sector rose 51 percent to $7.5 billion in 49 deals in Q1 2022 from $5 billion in 32 deals in Q4 2021. Funding decreased by 7 percent year-over-year compared to Q1 2021, as per a report from Mercom Capital Group.
Corporate funding include venture capital (VC) funding, public market, and debt financing.
“Although financing activity was strong QoQ with robust demand for solar assets, significant headwinds are building up that can slow the momentum considerably,” said Raj Prabhu, CEO at Mercom Capital Group. “Supply chain issues, higher inflation, and the interest rate trajectory going forward are major concerns.”
If the Department of Commerce, United States, decides to impose tariffs on solar module imports from Malaysia, Cambodia, Thailand, and Vietnam, there can be a substantial drop in investment activity, the report said.
Global VC funding in the solar sector in Q1 2022 came to $1.2 billion in 26 deals from 58 VC investors.
The top VC-funded deal in Q1 2022 was the $375 million raised by Palmetto. Of the $1.2 billion in VC funding raised in 26 deals during Q1 2022, 94 percent went to solar downstream companies, with $1.15 billion in 20 deals.
Public market financing in the solar sector dropped 115 percent to $2.5 billion in Q1 2022 from $1.2 billion in Q4 2021.
Debt financing in Q1 2022 increased to $3.8 billion from $1.6 billion in Q4 2021.
Securitization deals rose 137 percent to $1.1 billion in Q1 2022 from Q4 2021.
There were 29 solar M&A transactions in Q1 2022 compared to 43 in Q4 2021.
Over 23 GW of large-scale solar projects were acquired in Q1 2022 compared to 13.1 GW in Q4 2021. Large-scale solar project acquisitions in Q1 2022 were the second-highest recorded to date.
Project developers and independent power producers were the most active acquirers in Q1 2022, with 17 GW.