Public solar market financing sees record Q2, despite overall corporate funding fall

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Mercom Capital Group LLC has recorded an around 8.5% decrease in overall corporate funding in solar, from $6.4 billion in Q1 2015, to $5.9 billion in Q2. The top five project acquisitions, totaling 2.6 GW, were made in the U.S., Spain, South Africa, Thailand and China.

Commenting, Raj Prabhu, co-founder and CEO of Mercom Capital Group told pv magazine, “Corporate funding was down about 8.5 percent QoQ largely due to smaller debt deals in Q2. Chinese debt deals, which typically make up a large portion of debt transactions, lagged slightly this quarter. Barring quarterly fluctuations, market conditions remain strong in the solar sector with approximately 57 GW of installations expected in 2015."

Accounting for nearly a third of all large-scale solar project acquisitions, yieldcos were described by Raj Prabhu, CEO of Mercom Capital Group, as having had a "significant impact" on financial activity, raising $1.6 billion in public markets and $800 million in debt.

Venture capital and private equity (VC) funding fell from $195 million across 27 deals in Q1, to $142 million across 24 deals. At $60 million over 13 deals, downstream companies netted the majority of this. The table below represents the top five:

Debt financing also decreased Q/Q, from $5 billion to $3.4 billion. A $1.3 billion loan for GCL New Energy, from China Merchants Bank, Nanjing Branch, represented the biggest deal here.

Large-scale solar project acquisitions increased from 44 transactions in Q1 2015 totaling $953 million, to 66 (around 3.5 GW) totaling $2.9 billion in Q2. The large-scale project sector saw funding fall to $1.9 billion across 26 deals, however, compared to $2.5 billion over 29 deals in Q1. The table below shows the top five:

Company

Amount raised (US$)

Project

Investor

GE Energy Financial Services in partnership with Pacifico Energy

355 million (equity and loan)

96.2 MW solar PV project in Japan

A syndicate of 12 Japanese financial institutions led by The Bank of Tokyo Mitsubishi UFJ

sPower

168.5 million (loan)

25 solar assets, totaling 144 MW in three separate portfolios

KeyBank National Association, OneWest Bank and Zions Bank

Low Carbon

163.5 million (refinancing)

12 operational solar projects totaling 99.2 MW in the U.K.

Macquarie Infrastructure Debt Investment Solutions

Kong Sun Holdings Company

163 million (finance lease credit line)

PV projects in China

SPI Solar subsidiary, Jiangsu Solarbao Leasing

ONEE

149 million (loan)

PV projects with a total capacity of 75 MW

Co-financed by a $125 million World Bank loan and a $23.95 million loan from the Clean Technology Fund

Representing a slight increase, the residential and commercial sector raised $1.93 billion across five deals, compared to $1.92 billion raised in 10 deals. "Of this total, $775 million went to three loan funds and $1.2 billion went to two third-party lease or PPA funds. SolarCity announced $1.5 billion in two separate deals," wrote Mercom in a statement released.

The only segment to post positive results was public market financing, which reaped a record $2.3 billion in Q2, up from $1.3 billion in the previous quarter.

Excluding solar IPOs, of which there was one this quarter – First Solar and SunPower’s yieldco company, 8point3 Energy Partners, which raised $420 million – the largest deals in this sector were: the $670 million raised by Abengoa Yield; the $408 million raised by Risen Energy; and the $335 million raised by SunEdison’s TerraForm Global yieldco.

Merger and acquisition activity (M&A) also experienced a weaker quarter, with just 17 corporate solar transactions, compared to 29 in Q1. "Solar downstream companies accounted for 10 of these," reports Mercom.