Report: Solar Downstream Companies Grab a Large Portion of VC Funding in Q2 2018

Total corporate funding (including venture capital funding, public market, and debt financing) into the solar sector in Q2 2018 rose 12.5 percent quarter-over-quarter to $2.8 billion from the $2.5 billion raised in Q1 2018, according to a report by Mercom Capital.

Year-over-year, Q2 2018 funding was 102 percent higher than the $1.4 billion raised in Q2 2017.

“The first half of 2018 has been a roller-coaster for the solar industry marked by uncertainty due to Trump tariffs followed by the recent Chinese subsidy pullback,” commented Raj Prabhu, CEO of Mercom Capital Group. “Though financial activity was better compared to the same period last year, the market is still sorting out the winners and losers that would come out of a potential slowdown in Chinese demand, which is expected to result in an oversupply situation and eventual price crash in components across the globe.”

Of the $298 million in VC funding raised in 12 deals during Q2 2018, 89 percent went into solar downstream companies, which raised nearly $265 million in eight deals. In Q1 2018, solar downstream companies captured 77 percent of the total amount raised, bringing in $125 million in 18 deals

Thin-film companies raised more than $23 million in two deals during Q2 2018. There were no thin-film deals in Q1 2018. In Q2 2017, thin film companies raised more than $25 million in one deal. One BOS Company, Greenbyte, raised $6.14 million from Belgian investment firm Korys. One PV technology company, Nines PV, raised $3.52 million from InnoEnergy.

Announced debt financing activity in the first half of 2018 ($3.6 billion in 32 deals) was 22 percent higher compared to the first half of 2017 when $3 billion was raised in 33 deals. Most of that increase was due to two securitization deals: Vivint solar raised $466 million through asset-backed notes and Dividend Finance secured $105 million in a similar deal.

Large-scale project funding in the first half of 2018 saw $7.96 billion announced for 98 projects compared to 1H 2017 when a record $7.4 billion was raised in 81 project funding deals.

There were 117 large-scale project acquisitions in 1H 2018 totaling 11.6 GW compared to 101 project acquisitions totaling 10.9 GW in the first half of 2017.

Investment firms and funds were the most active acquirers in 1H 2018, picking up projects totaling 4 GW.

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