Funding reflects solar advance into mainstream

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In a sign of solar’s advance from alternative to mainstream energy source, public fundraising by solar companies rose in 2013 at the expense of venture capital backing, according to figures compiled by market research company Mercom Capital Group.

Mercom’s annual and fourth quarter figures showed total corporate funding for the industry grew 25% in 2013 to almost $10 billion of which VC cash injections fell 40% to $600 million in 97 deals with Mercom CEO Raj Prabhu announcing: "Higher valuations among public solar companies have opened up the capital markets again as an avenue for fundraising at attractive terms. IPOs are back."

Large scale project funding, residential and commercial lease funding and merger and acquisition activity were all on the rise in 2013 and although the China Development Bank was the most active creditor – bankrolling five Chinese solar companies – 2013 saw non-Chinese companies secure more backing than the amount of domestic loans secured in the People’s Republic for the first time since 2010.

Publicly financed deals soared from $893 million in 23 deals in 2012 to $2.8 billion in 39 deals with seven IPOs raising more than $1 billion further.

Large scale project financing leapt from $8.7 billion – in 84 deals – to $13.6 billion in 152 deals with $6 billion secured in 46 deals in the fourth quarter alone.

Canadian and Moroccan large scale project funding

U.S. comapny Solar Star Funding’s $1 billion backing for its Solar Star 1 and 2 projects topped the pile ahead of Samsung Renewable Energy‘s $498 million investment in Canada’s Grand Renewable Solar Project and the $454 million and $446 million loans to the Noor II and III CSP projects in Morocco.

Recurrent Energy secured a $400 million equity investment – with Google one of the co-investors – for its California 5 and Arizona 1 projects and compatriots Sempra Energy borrowed $400 million for its Copper Mountain 3 scheme as Mercom calculated almost 9 GW of large-scale projects were developed worldwide in the last three months of 2013.

The rise of Asia was reflected by the fact Thailand’s Kasinkornbank – formerly the Thai Farmers’ Bank – was the world’s biggest investor in large-scale solar, backing 15 projects, with Japan’s biggest lender, the Bank of Tokyo Mitsubishi UFJ funding 10 schemes.

Vivint Solar, SolarCity, Sunrun, SunPower and SunEdison were the top beneficiaries as residential and commercial lease funding rose a hefty 69% to $3.34 billion from 22 projects with almost $1 billion in the fourth quarter.

‘European companies struggled’

Industry consolidation continued as Mercom warned ‘European companies continued to struggle with bankruptcies and insolvencies.’ Mercom tracked 28 solar companies, of which 18 were manufacturers, which filed for insolvency or bankruptcy protection during the year.

U.S. company Applied Materials’ acquisition of Tokyo Electron for $9.4 billion was comfortably the biggest solar M&A deal of 2013 with Swiss inverter manufacturer ABB’s purchase of Power-One for $1.03 billion in second place. Chinese manufacturer Shunfeng Photovoltaic International‘s acquisition of the manufacturing facilities of distressed former giant Suntech’s Wuxi Suntech Power unit, for $489 million, was the third biggest deal ahead of Goldpoly New Energy Holdings’ non-cash acquisition of China Merchants New Energy Holdings – in a deal worth an estimated $273 million – and Dow Corning‘s acquisition of Hemlock Semiconductor for $240 million.

Contrasting with the surge in public funding, falling VC backing in 2013 was dominated by downstream companies which secured 45% of the pot – $262 million in 34 deals – while PV companies trailed CSP developers with $104 million of venture capital cash secured for 17 projects.

Thin-film companies in particular felt the squeeze with VC funding tumbling 77% to just $72 million from $314 million in 2012.

Chinese project developer Heifei Golden Sun Technology secured the biggest chunk of VC cash with $69 million, ahead of third-party financing company Clean Power Finance ($62 million) and module manufacturer Solexel ($55 million). The top five was completed by two residential companies, Sungevity securing $43 million of VC backing and OneRoof Energy $30 million.