Global Corporate Funding in Solar Sector Surges 51% in Q1 2022
Over 23 GW of solar projects were acquired during the quarter
April 14, 2022
Total corporate funding—including venture capital (VC) funding, public market, and debt financing—into the solar sector globally came to $7.5 billion through 49 deals in the first quarter (Q1) 2022, according to Mercom Capital Group’s recently published Q1 2022 Solar Funding and M&A Report.
This was a 51% increase quarter-over-quarter (QoQ) compared to $5 billion raised in 32 deals in Q4 2021, and a decrease of 7% year-over-year (YoY) compared to Q1 2021.
“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.
“Continuing supply chain issues, higher inflation, and the interest rate trajectory going forward are already major concerns. Adding to this, if the Department of Commerce decides to impose tariffs on module imports from Malaysia, Cambodia, Thailand, and Vietnam, we could be looking at a substantial drop-off in the investment activity,” he added.
In Q1 2022, global VC funding in the solar sector was reported at $1.2 billion in 26 deals, a 19% increase compared to $1 billion in 14 deals in Q1 2021. However, it decreased by 45% compared to $2.2 billion raised in 19 deals in Q4 2021.
The top VC-funded companies in the quarter were: Palmetto, which raised $375 million, Aurora Solar with $200 million, DSD Renewables with $200 million, Aspen Power Partners with $120 million, and PosiGen with $100 million.
The first quarter saw 58 VC and private equity investors participating in funding deals.
According to the report, solar public market financing activity totaled $2.5 billion in Q1 2022, a 115% increase compared to $1.2 billion raised in Q4 2021. In a YoY comparison, funding was slightly lower by 9%. There was one initial public offering (IPO) announced during the quarter.
Debt financing activity stood at $3.8 billion, a 137% increase compared to Q4 2021, when $1.6 billion was raised. However, debt financing was down 12% YoY.
The report notes that four securitization deals brought in $1.1 billion in Q1 2022, an 137% increase compared to the previous quarter when $458 million was raised in two deals.
The report also revealed that during Q1 2022, there were 29 solar merger and acquisition (M&A) transactions, down from 43 in Q4 2021. Solar downstream companies led the M&A activity.
According to the report, the solar project acquisition was the second most recorded to date in Q1 2022. A total of 23 GW of solar projects were acquired in Q1 2022 compared to 13.1 GW in the previous quarter.
Of these, project developers and independent power producers were the most active in the quarter, with over 17 GW of projects being acquired by them, followed by investment firms and funds, which acquired 3.6 GW.
Eighty-two large-scale solar projects were acquired in Q1 2022, spreading across 20 countries globally. The United States led in terms of recorded acquisitions with 17 GW, followed by Spain with 1.9 GW and the United Kingdom with over 1 GW of acquisitions.