Total Corporate Funding in the Solar Sector Comes to $1.7 Billion in Q2 2016

Mercom Capital Group, llc has announced that it has released its report on  funding and merger and acquisition (M&A) activity for the solar sector  in the second quarter of 2016.

Total corporate funding, including venture capital funding, public  market and debt financing into the solar sector in Q2 2016 fell to $1.7  billion this quarter, a 41 percent drop compared to the $2.8 billion raised in Q1 2016. Year-over-year total corporate funding was down  significantly compared to $5.9 billion in the second quarter of last  year.

“The solar industry continues to experience weakness in terms of  financing activity, and corporate funding in Q2 2016 was at its lowest  level in three years,” said Raj Prabhu, CEO and Co-Founder of Mercom  Capital Group.

Global solar VC funding (including private equity) saw a large decline  this quarter with $174 million in 16 deals compared to $406 million in  23 deals in Q1 2016. Year-over-year (YoY) VC numbers were slightly better compared to Q2 2015 with $142 million in 24 deals.

Solar downstream companies raised the most (64 percent) VC funding in Q2  2016 with $112 million in seven deals. A large part of the total came  from the $100 million raised by Silicon Ranch from private equity firm  Partners Group.

Other VC deals this quarter included the $20 million raised by Tigo  Energy, 1366 Technologies’ $15 million raise, and the $12.5 million  raised by Sol Voltaics. A total of 21 VC investors participated in  funding deals.

Solar public market financing in Q2 2016 came to $179 million in four  deals compared to $94 million in four deals in the first quarter of 2016  and $2.3 billion in 12 deals in Q2 2015.

Announced debt financing came to $1.3 billion in 12 deals in Q2 2016  compared to $2.3 billion raised in 19 deals in Q1 2016 and $3.4 billion in 14 deals in Q2 2015. The top large-scale project funding deal in Q2 2016 was the $588 million  secured by Engie for its 100 MW Kathu CSP solar project located in  Northern Cape Province of South Africa. Connor, Clark & Lunn Infrastructure, Samsung Renewable Energy and Six Nations of the Grand  River Development secured $482 million for their 100 MW Grand Renewable  solar project. DE Shaw Renewables received a $226 million syndicated  loan for its 100 MW North Star solar project. Suzhou GCL New Energy  secured a loan of $200 million for the construction of Hubei Jiangling  Sanhu solar project and Hefei Changfeng Mingcheng Reservoir solar  projects (60 MW). Mytrah secured a $175 million loan for the development of a portfolio of solar and wind projects in the company's pipeline.

It was a good quarter for residential and commercial solar funds, led by  SolarCity, Mosaic, and Sunnova Energy, with $1.36 billion in 11 deals in Q2 2016, a 36 percent increase over the $1 billion raised in six deals in Q1 2016. Of the $1.36 billion announced in Q2 2016, $800 million went  towards the lease model and $555 million went to loan funds. Since 2009, almost $20 billion has gone into residential/commercial solar funds.

There were 17 solar M&A transactions in the second quarter of 2016  compared to 14 in Q1 2016. Almost half of the M&A transactions involved  solar downstream companies with eight deals, which was followed by BOS  companies with five.

Sungevity announced a merger with Easterly Acquisition Corp, a blank  check company traded on Nasdaq in a deal valued at $357 million.

There were 38 large-scale solar project acquisitions (13 disclosed for  $1.9 billion) in Q2 2016, compared to Q1 2016 with 50 transactions (22  disclosed for $1.2 billion). More than 2 GW of solar projects were acquired in the second quarter compared to the 2.4 GW in the previous quarter.

The largest disclosed project acquisition by dollar amount in Q2 2016 was the $1.4 billion acquisition of 1,140 MW (solar 994 MW and wind 146 MW) renewable energy project pipeline of Welspun Renewables Energy by Tata Power Renewable Energy, a Tata Power subsidiary. NextEnergy Solar Fund, a UK-based investment fund, acquired a portfolio of five solar projects totaling 84.3 MW for $140 million. United PV (Changzhou) Investment, a wholly owned subsidiary of United Photovoltaics Group, acquired a 99 percent equity interest in Guodian Wulateqianqi Photovoltaics Power from Forty-eighth Research Institute of China Electronics Technology Group for $75 million, which gave them a 50 MW solar project located in Inner Mongolia. 8point3 Energy Partners, a yieldco formed by First Solar and SunPower acquired an interest in the 40 MW Kingbird solar project located in Kern County, California, from First Solar, for $60 million. Sky Capital America, a wholly owned U.S. subsidiary of Sky Solar, acquired 22 operating solar projects in California and one operating solar project in Massachusetts for a combined 22 MW from Greenleaf-TNX and SunPeak Universal Holdings for $57 million.

Mercom also tracked 196 new large-scale project announcements worldwide in Q2 2016 totaling 11.3 GW.