The question on the collective renewable energy industry’s mind since last November has been, “How will the election of Donald Trump impact us?” Mercom’s Q1 Solar 2017 Funding and M&A Report gives the first bit of insight into investor confidence in the solar industry since President Trump took office.
Total corporate funding in the solar sector increased from Q4 2016’s total to $3.2 billion and year-over-year, Q1 2017 was about 15 percent higher than Q1 2016. None of the five largest announced projects (by funded dollar amount) were in the United States, but the largest project acquisition during the quarter was.
“Q1 funding levels were up in the solar sector from the 2016 lows, largely due to increased debt financing activity. Corporate funding never reached $3 billion in any of the quarters in 2016. M&A activity was also strong with several large deals. Solar public companies also had a good first quarter,” commented Raj Prabhu, CEO of Mercom Capital Group.
Global VC funding (venture capital, private equity, and corporate venture capital) for the solar sector saw a 78 percent rise this quarter with $585 million in 22 deals compared to $329 million raised in the same number of deals in Q4 2016. The amount raised was also higher YoY compared to the $406 million raised in 23 deals in Q1 2016.
A large part of the VC funding in Q1 2017 went to solar downstream companies; $548 million was raised in nine deals.
Top VC deals included the $200 million raised by ReNew Power Ventures followed by the $155 million raised by Greenko Energy Holdings, the $125 million secured by Hero Future Energies, and then Silicon Ranch’s $55 million. A total of 23 VC investors participated in Q1 2017.
Solar public market financing came to $461 million in 13 deals in Q1 2017, slightly lower compared to the $615 million (also in 13 deals) in Q4 2016, but significantly higher compared to the same quarter of last year when $94 million was raised in four deals. There was one IPO in Q1 2017 by Clenergy compared to two in Q4 2016.
Announced debt financing came in strong with $2.2 billion raised in 25 deals. In comparison, there were 10 deals in Q4 2016 for a total of $610 million. YoY, $2.3 billion was raised in 19 deals in Q1 2016. Most of the debt was raised by solar downstream companies.
In Q1 2017, Solar Mosaic raised $139 million through the first securitization of its residential solar loan portfolio at a 4.45 percent interest rate.
Announced large-scale project funding in Q1 2017 remained steady with $2.6 billion in 33 deals compared to $3 billion in 38 deals in Q4 2016. In a YoY comparison, $1.4 billion was raised in 24 deals in Q1 2016.
Residential and commercial solar funds announced in Q1 2017 dropped to $630 million in six deals compared to $1.5 billion in eight deals in Q4 2016. During the same quarter last year (Q1 2016), $1 billion was raised in six deals. Of the $630 million announced this quarter, $500 million went towards the lease/PPA model and $130 million went to loan funds. A total of more than $23 billion has now gone into residential and commercial funds since 2009.
There were 29 solar M&A transactions in Q1 2017 compared to 20 transactions in Q4 2016 and 14 transactions in Q1 2016. Of the 29 total transactions in Q1 2017, 20 involved solar downstream companies.
There were 49 large-scale solar project acquisitions (18 disclosed for $1.9 billion) in Q1 2017 compared to 73 transactions (23 disclosed for $2.1 billion) in Q4 2016. In a YoY comparison, there were 50 transactions (22 disclosed for $1.2 billion) in Q1 2016. About 7.4 GW of solar projects were acquired in Q1 2017 compared to 5 GW in Q4 2016. Investment firms and funds were the most active acquirers Q1 2017, picking up about 21 projects totaling 2.8 GW, followed by project developers with nine transactions for 3.3 GW. Yieldcos had four transactions for 962 MW.
— Solar Builder magazine