The global corporate funding for the solar sector, including venture capital (VC) funding, public market, and debt financing, totaled $8.1 billion in 36 deals in Q1 2021, an increase of 21% compared to the $6.7 billion raised in 43 deals in Q4 2020.
These numbers were revealed in the Mercom Capital Group’s Q1 2021 Solar Funding and M&A Report, which covered nearly 340 companies and investors.
The increase in corporate funding was attributed to the higher debt financing activity in the first quarter of 2021.
Some of the top corporate-funded deals of the quarter included: $2.2 billion raised by Shoals Technologies Group through an IPO; the $1.1 billion raised by Enphase Energy, Loanpal’s $800 million raise; Intersect Power’s $482 million raise; Loanpal’s $390 million securitization deal, and Sunrun’s $389 million raise.
Raj Prabhu, CEO of Mercom Capital Group, said, “Financing activity in the solar sector started strong in 2021 with Q1 numbers up substantially year-over-year. Even though solar stocks lost some of their spark in the first quarter after an unprecedented run in 2020, a big IPO and record securitization activity lifted overall fundraising totals. Solar assets continue to be in great demand with almost 15 GW of projects acquired in Q1.”
The global venture capital funding for the solar sector in Q1 2021 stood at $1 billion, an increase of 33% compared to $773 million raised in Q4 2020.
The report stated that out of the total value of $1 billion raised in venture capital funding in Q1 2021, 96% went to solar downstream companies with $990 million in 10 deals. In Q4 2020, solar downstream companies had raised $748 million in six deals. A total of 43 VC investors participated in Q1 2021 compared to 47 VC investors in Q4 2020.
The public market financing saw a slight dip with $2.8 billion raised in eight deals in Q1 2021, a decrease of 7% compared to Q4 2020. There were only two IPOs announced during the quarter.
Debt financing showed growth and stood at $4.3 billion in 14 deals, an increase of 48% compared to Q4, 2020.
In Q1 2021, five securitization deals worth $1.4 billion were recorded, which marked the largest financing through securitization since 2013.
According to the report, solar mergers and acquisitions (M&A) transactions also showed growth in Q1 2021, with 20 transactions taking place in the first quarter of 2021 compared to 12 deals in Q1 2020. There were 82 large-scale solar project acquisitions (nine disclosed for $854 million) in Q1 2021, compared to 83 transactions in Q4 2020.
A total of nearly 15 GW of projects were acquired in Q1 2021.
The project M&A activities were led by project developers and independent power producers, who acquired 5.2 GW of projects, followed by investment firms and funds, which acquired 4.2 GW of projects.
In Q1 2021, solar project acquisitions were spread across 26 countries. Spain led the way in terms with 5.5 GW, followed by the United States with 4.8 GW and Greece with 1.6 GW of acquisitions.
The global corporate funding into the solar sector – including venture capital, private equity, debt financing, and public market financing – had increased by 24% to $14.5 billion in 2020 from $11.7 billion in 2019.