Downstream solar dominates VC funding scene

In its Q1 2013 Solar Funding and M&A report, Mercom reveals end customers such as solar leasing companies and system providers dominated for the first time since it started tracking solar VC levels.

The top two deals in the first three months of the year saw OneRoof Energy raise $30 million from Hanwha and Sungevity given $28 million from five investor funds.

CSP developer eSolar raised $12.8 million, flexible thin film tech company crystalsol sourced $11m and there was $7 million apiece for portable solar system company Goal Zero and solar system provider PsomasFMG as solar lease companies raised $75 million in eight deals and thin film companies brought in $25 million in six deals.

Overall, the slump in VC funding which started in the third quarter of last year continued with $126 million raised in 26 deals from January to March, the second lowest quarter recorded since 2008 and down from $220 million in 27 VC funding deals from October to December 2012.

The boom in solar leasing was reflected by such companies raising around $500 million for residential and commercial projects, a hefty chunk of the $5 billion recorded to date by Mercom.

Three $100 million deals dominated with SunPower securing financing from U.S. Bancorp for residential installations and OneRoof investing the same figure with the MS Solar Holdings subsidiary of Morgan Stanley and Main Street Power, with debt financing by the National Bank of Arizona.

Despite Bosch’s well-publicised decision to retreat from solar, Bosch Solar Energy invested $100 million in its aleo solar subsidiary for commercial and residential business in the U.S.

M&A activity amounted to $306 million in 15 deals, according to Mercom, with details of only half of the deals announced and the nature of acquisitions split between the capture of downstream markets for upstream producers, the purchase of key technologies and IP and the rescue of distressed companies.

Of the publicized deals, cell manufacturer Goldpoly New Energy Holdings acquired plant developer China Merchants New Energy Holdings in a non-cash deal worth $273 million.

Elsewhere, UK building supplies company Travis Perkins bought PV wholesaler and distributer Solflex for $12.5 million and cell maker Shunfeng Photovoltaic acquired a 45.45% stake in ingot and wafer manufacturer Shunfeng Materials for $12 million. Hydrogen fuel and electronic hybrid systems developer Proton Power Systems bought solar power storage company SPower Holdings for $6.7 million and industrial automation company Cencorp Corp acquired module manufacturer Sunweb Solar for $1.3 million.

The purchase of SunPower’s 579 MW Antelope Valley Solar Projects by Warren Buffett’s MidAmerican Solar predictably dominated project sales in the first three months of 2013 as investment funds, developers and utilities paid $137 million for more than 1 GW of projects.

That figure was down on the $297 million paid for projects from October to December 2012 although it represented a rise in the number of deals to 19 from 17 in the previous quarter.