VC solar funding soars

12. April 2011 | Top News, Markets & Trends, Industry & Suppliers | By:  Becky Stuart

The first quarter of this year has seen strong venture capital (VC) funding in the solar sector, having increased almost three fold from the fourth quarter of 2010. Merger and acquisition (M&A) activity is also strong.

photovoltaic panels against sky Ontario

VC solar funding and M&A activitiy was strong in Q1 2011. The US is still leading activity, while thin film is a popular technology. Image: Flickr/kmaraj.

Mercom Capital Group, llc, has released its report on both VC funding and M&A activity for solar for Q1 2011. Both areas have shown positive growth, despite a drop in photovoltaic demand and feed-in tariff cuts in key European markets.

For example, VC funding reached $658 million via 25 deals. This is compared to $238 million in the previous quarter and $311 million in the first quarter of last year.

Meanwhile, Mercom says that M&A activity amounted to $1.4 billion in 18 transactions, compared to $266 million in Q4 2010 and $909 million in Q1 2010. Debt and other types of funding activities came in at $9.7 billion for the quarter through 15 deals.

Overall, there were 55 different VC investors, which participated in 24 disclosed deals in Q1 2011. Of this, the group says that five deals accounted for almost 70 percent of the funding. These comprise:

  • A $201 million Series E raise by concentrated solar power company, Bright Source Energy;
  • Miasole, a copper indium gallium selenide (CIGS) thin film panel maker, which raised $106 million in Series F funding;
  • Alta Devices, a gallium arsenide (GaAs) thin film developer, which raised $72 million in Series C funding;
  • A $51.6 million Series E raise by CIGS based flexible thin film maker Solopower; and
  • Kiran Energy, a solar power project developer, which raised $30 million in Series A funding.

Breakdown

Mercom found that thin film companies attracted the most funding, with $283 million raised in seven deals. CIGS was the most popular technology within thin films, accounting for $196 million in four deals. Furthermore, concentrated solar companies raised $212 million in three deals, followed by $84 million raised by solar downstream companies in six deals.

In continuing with last year's trend, the group says that VC arms of companies remained active in the solar sector. Investors included Alstom, BP, GE, Chevron, Dow Chemical, Intel and Hanwha. California State Teachers’ Retirement System (CalSTRS), a pension fund, also invested in the sector this quarter.

In terms of geographical spread, the U.S. dominated. In addition to accounting for 87 percent of all VC funding in the first quarter, 89 percent of all VC funds raised by solar companies in 2010 were also from the country.

Out of $9.8 billion announced in debt and other funding, $7.6 billion came in from the Bank of China for Jinko Solar. This, says Mercom, is a continuing trend from last year, where Chinese Government banks provided a total of approximately $34 billion in credit to Chinese solar manufacturers.

"Looking at the first quarter funding activities, it is clear that VC investor’s appetite for solar has not gone away. In fact, this was the best VC funding quarter since Q2 of 2010 ($948 million) and the second best quarter since Q1 of 2008," commented Raj Prabhu, Managing Partner at Mercom Capital Group.


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