VC funding remains downstream20. August 2013 | Financial & Legal Affairs, Markets & Trends | By: Jonathan Gifford
The latest report into venture capital (VC) investment in the photovoltaic industry has indicated investments slightly improving, however remaining at a low level.
In its Q2 2013 report into VC funding in solar, Mercom Capital has reported that global VC investment rose to $189 million, up from $126 million in Q1. Downstream companies continue to attract the bulk of VC funds.
Mercom reports that the number of VC deals for Q2 of this year totaled 19, compared to 26 last quarter. The top VC deal for the quarter was the $69 million raised by Hefei Golden Sun Energy Technology, a Chinese solar developer. In the U.S., finance provider Clean Power Finance rose $42 million and disruptive kerfless wafer technology startups Solexel and Scifiniti both raised $14.8 and $10 million respectively. Coming in at fourth in the Mercom figures for the quarter was power optimizer Tigo Energy with $13 million.
Despite Solexel, Scifiniti and Tigo Energy’s appearance in the top five for Q2 list, Mercom notes that solar downstream companies continue to attract most of the VC funding. Downstream companies attracted $128 million of the total $189 million for the quarter. Kerfless cell startup Scifiniti came out of "stealth mode" at the Intersolar Trade Show in July.
The market analysts note in their report: “Even with the growth in installations and stabilizing module prices, venture investments in solar remain depressed as technology companies have continued to struggle.” Mercom Capital has previously observed that VC funding in solar halved in 2012.
Project and third party finance
It’s worth noting however that these figures do not mean that there isn’t money flowing into photovoltaics. Mercom Capital notes that there were 35 large scale project funding deals announced, including MidAmerican Energy which completed a $1 billion solar bond financing deal, the largest of its type to date. MidAmerican Energy has made a series of large-scale project acquisitions in the U.S. and raised the profile of solar project investment, through its high profile owner, Berkshire Hathaway’s Warren Buffet.
Third party finance firms have raised $1.33 billion for residential and commercial solar project funds, as disclosed by the firms in Q2. This is strongest quarter for solar lease funds, Mercom notes.
In China, financing of various firms totaled $259 million, which shows a slowdown from 2010, but still brings the total of debts to around $53 billion, amongst Chinese banks.
In M&A activity the trend towards consolidation appears strong, totaling $1.27 billion across 18 transactions. Although Mercom notes that many deals were not disclosed. These deals tended towards acquisitions of distressed assets or struggling firms.
Amongst inverter players, M&A activity was observed, with the largest disclosed deal being the acquisition of Power-One by Swiss multinational ABB. The deal is reported to be worth around $1 billion.
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