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Solar Sector Keeping Investors Busy

Highlighting once again that one of the key stories for renewable energy in 2014 will be renewable energy finance, Q1 2014 shows high growth for investments in solar. Total global corporate funding in the solar sector, including venture capital (VC), private equity (PE), debt financing, and other equity financings raised by public companies, came in at $7 billion, compared to $5 billion in Q4 2013, according to a report just released by Mercom Capital Group.

The report dives into venture capital funding, project funding, corporate mergers and acquisitions and third-party lease funding. All sectors showed an increase in the number of dollars invested and/or number of transactions showing just how favorably investors view solar

Global VC funding, PE and corporate VC in Q1 2014 was almost double what it was in Q1 2013, totaling $251 million in 26 deals, up from $87 million in 24 deals in Q4 2013, mostly due to one large deal. Solar downstream companies attracted most of the VC funding this quarter, with $182 million in 13 deals.

Raj Prabhu, CEO of Mercom Capital Group, commented, “It was a robust quarter for solar as financing activity surged in almost all areas. The big story continues to be strong capital markets. VC funding was up with several funding deals involving investment “platforms,” while third-party residential/commercial funds continue to raise record amounts.”

The largest VC/PE deal in Q1 2014 was the $125 million raised in a Series C round by Renewable Energy Trust Capital, a finance platform established to acquire and own solar projects and provider of a single comprehensive equity capital source. Investors included BlueMountain Capital Management, and Global Cleantech Capital.

Microinverter company SolarBridge Technologies raised $42 million from investors including Constellation Technology Ventures, Shea Ventures, Rho Ventures, and Prelude Ventures.

Other Top 5 deals included:

  • $18 million raised by solar project developer FLS Energy;
  • $11 million raised by the for-profit social enterprise d.light, which manufactures and distributes solar lighting and power products;
  • $7 million raised by Off-Grid Electric, a Tanzania-based company providing solar energy in Africa using a prepaid model.

Project Funding

There were 43 large-scale project funding deals totaling $3.6 billion announced in Q1 2014, which break out as follows.

  • $942 million loan to China WindPower Group for a range of Chinese PV projects with a combined capacity of 800 MW;
  • $428 million project funding for Sempra Energy to develop the 250-MW Copper Mountain Solar 3 Project in Nevada;
  • $305 million loan to SoftBank and Mitsui for the 111-MW Tomatoh Abira Solar Project in Japan;
  • $250 million loan to Abengoa/Shikun & Binui Renewable Energy for the 110-MW Ashalim Thermo Solar Project in Israel; and
  • $250 million equity investment made by various groups for Japan Solar and Nippon Renewable Energy to develop Japanese solar projects totaling 157.5 MW.

Third-party Leasing M&A and Project Acquisition on the Rise

The Mercom report noted the continued upward trend in third-party residential and commercial solar lease fundraising in Q1 2014, tracking more than $1 billion raised. OneRoof Energy, a solar installer and third-party finance firm went public in Q1 2014 via a reverse merger on the Toronto Stock Exchange.

In addition, corporate solar M&A activity surged to a record 38 transactions in Q1 2014, up from 25 transactions in Q4 2013.  Solar downstream companies were involved in the most number of M&A transactions with 22.

It was also a record quarter for project acquisitions in Q1 2014, totaling $1.5 billion in 42 transactions, with more than 1.7 GW in solar projects changing hands. See the chart below for more on this.

Mercom reported that it saw 170 large-scale project announcements worldwide in Q1 2014 representing almost 7 GW.

To learn more about the 79-page report or to purchase a copy, click here.

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