Corporate funding in solar reached $25.3bn in 2015, finds Mercom Capital

A report by clean energy communications and consulting firm Mercom Capital has revealed that total corporate funding for the global solar sector reached $25.3 billion in 2015.

The overall investment total includes venture capital/private equity (VC), debt financing and public market financing, with the VC sector accounting for $1.1 billion across 83 deals.

Mercom Capital CEO remarked that the figures reveal a "good year for the solar sector" when stock market turbulence and yieldco uncertainty is taken into account, but the total invested still fell slightly short of the year prior – in 2014 global corporate funding in solar hit $26.5 billion.

Uncertainty in the U.S. over the future stability of the solar market stemmed from the Investment Tax Credit (ITC) question, but its extension at the very end of 2015 has delivered a "much-needed boost for the sector", Prabhu said, and will pave the way for a strong 2016.

VC funding

Of the $1.1 billion raised in VC funding for the year, 69% – $727 million – came via solar downstream companies. PV technology companies attracted $173 million in investment, with BoS firms attracting $87 million in VC funding. Some way below that level were thin-film developers, which received VC funding of $44 million, with service providers raising $15 million and the CPV and CSP industries each receiving $3 million in funding.

A further $100 million in VC funding went the way of off-grid solar companies operating in the markets of Africa, India and South Asia.

Sunnova Energy raised the most in direct VC funding globally in 2015, attracting $300 million. Silicor Materials was the next largest recipient of VC investment ($105 million), followed by Sunlight Financial ($80 million), Sungevity ($50 million) and Conergy, which raised $45 million.

Public market and large-scale financing

In terms of public market financing, 2015 was the strongest year yet, with $6 billion raised globally across 38 deals. Of that figure, seven were IPOs that brought in more than $1.8 billion for Sunrun, Xinte Energy, SolarEdge, CHORUS Clean Energy and Grenergy Renovables.

Yieldcos, despite growing uncertainty of their efficacy as a business model for solar, still managed to reel in $1.1 billion via two IPOs – TerraForm Global Yieldco and the 8point3 Energy Partners venture.

The bulk of financial activity across the solar sector in 2015 was via debt financing, which totaled $18.3 billion – more than half of that figure emanating from China ($10.9 billion in 33 deals). A total of $335 million was raised via four securitization deals last year: for SolarCity, SunRun, BBOXX and AES.

Further, 124 large-scale solar project funding deals attracted $11.6 billion, with 145 investors backing more than 6.6 GW of large-scale PV. At the residential and commercial scale, solar enjoyed a record year for dollars raised in project funds, reaching $5.5 billion invested across 23 funds, up from $4 billion via 34 funds in 2014.

"With the extension of the ITC, we predict third-party owned financing companies will continue to raise residential and commercial funds in large numbers," said Prabhu. "Since 2009, third-party owned financing firms offering lease, PPA and loans have raised more than $17 billion."

Corporate M&A transactions, according to Mercom’s assessment, numbered 80 and raised more than $3 billion, with solar downstream companies once again responsible for the bulk of investment in this sector.