Solar Sector Records 81% Drop in VC Funding in Q1, Corporate Funding Down by 4%

Around 10.8 GW of solar projects were acquired in Q1 2024


The solar sector secured $8.1 billion in corporate funding through 41 transactions in the first quarter (Q1) of 2024, marking a 4% decrease from the $8.4 billion raised in 42 deals during the same period in 2023.

However, there was a 47% increase in funding compared to Q4 2023, which saw $5.5 billion raised in 37 deals.

The numbers were revealed in Mercom Capital Group’s newly released Q1 2024 Solar Funding and M&A Report.

Solar Funding Chart 1

In Q1 2024, global venture capital funding for the solar sector amounted to $406 million across 13 deals, an 81% decrease year-over-year (YoY) from the $2.1 billion raised in 18 deals. Compared to Q4 2023, the funding also fell by 68%, from $1.3 billion raised in 19 deals.

“The solar sector faces significant uncertainty and difficult investment conditions,” noted Raj Prabhu, CEO of Mercom Capital Group. “Challenges include potential long-term high-interest rates, high labor and construction expenses due to inflation, and supply chain disruptions. Ongoing trade disputes and tariffs compound these issues.”

According to Prabhu, the expectation of interest rate cuts, influenced by Federal Reserve predictions, has not materialized as anticipated. Initial hopes for four quarter-point cuts starting in March have been scaled back significantly due to persistent high inflation and a tight labor market in the U.S., affecting the solar industry’s outlook.

Solar Funding Chart 2

In Q1 2024, the leading venture capital recipients in the solar sector included ENVIRIA, which secured $200 million; Soly, which raised $32 million; HDM Solar, with $13 million; Ecofy, at $11 million; and Hohm Energy, receiving $8 million.

Solar downstream companies attracted 70% of the $406 million in VC funding across 13 deals, totaling $283 million in 10 deals during Q1 2024. These companies secured $914 million in 14 deals in the previous quarter, representing 72% of the total VC funding. On a YoY basis, in Q1 2023, solar downstream companies made up 63% of VC funding, with $1.3 billion raised in 10 deals.

In the public market, solar sector financing reached $1.4 billion across six deals in Q1 2024, showing a 39% decrease compared to the $2.3 billion funded through seven deals in Q1 2023. However, there was a substantial quarter-over-quarter increase of 627%, from $195 million in three deals in Q4 2023, marking a significant rebound from a particularly weak quarter.

Announced debt financing in the solar sector for Q1 2024 amounted to $6.2 billion through 22 deals, reflecting a 59% increase YoY from Q1 2023, when $3.9 billion was raised in 17 deals. Compared to Q4 2023, there was a 55% increase in debt financing, which totaled $4 billion across 15 deals.

Solar Funding Chart 3

In Q1 2024, there were 21 solar mergers and acquisitions (M&A) transactions, matching the total from Q4 2023 but a 22% decrease from the 27 transactions recorded in Q1 2023.

The majority of M&A activity was concentrated in the solar downstream, which accounted for 18 of the transactions, with the remaining deals involving one balance of system company, one manufacturer, and one service provider.

Around 10.8 GW of solar projects were acquired in Q1 2024, a slight decrease from the 11.9 GW acquired in Q1 2023. This is compared to a higher volume of 13.7 GW acquired in the previous quarter, Q4 2023.

In Q1 2024, investment firms and funds were the top acquirers of solar projects, securing over 4.4 GW. Project developers and independent power producers followed, acquiring 3.5 GW. Electric utilities purchased 1.3 GW, while oil and gas majors acquired 309 MW. A diverse group, including telecommunications companies, integrated energy trading companies, insurance companies, and other undisclosed entities, has acquired the remaining capacity.

“The interconnection queue for renewable projects in the U.S. has grown significantly, creating congestion and delays in permitting and project development. This backlog adds to the uncertainty surrounding project timelines and investment returns,” Raj said, speaking on the outlook for the solar sector.

“The combination of financial uncertainty, trade dynamics, and permitting challenges contributes to a cautious outlook for the solar industry,” Raj concluded.

The report on these transactions spans 97 pages and includes 274 companies and investors, featuring 66 charts, graphs, and tables to provide detailed insights.

Further details on the Q1 2024 Solar Funding and M&A activity can be accessed at: