Corporate Funding in Solar Sector Up 51% Quarter-over-Quarter with $7.5B

Source: 4/14/2022, Location: North America

Mercom Capital Group, llc, a global clean energy communications and consulting firm, released its report on funding and merger and acquisition (M&A) activity for the global solar sector in the first quarter of 2022.

Total corporate funding—including venture capital (VC) funding, public market, and debt financing—in the solar sector in Q1 2022 came to $7.5 billion in 49 deals, 51% higher compared to $5 billion in 32 deals in Q4 2021. Funding was lower by 7% year-over-year (YoY) compared to Q1 2021.

“Although financing activity was strong QoQ with robust demand for solar assets, significant headwinds are building up that can slow the momentum considerably,” said Raj Prabhu, CEO at Mercom Capital Group. “Continuing supply chain issues, higher inflation, and the interest rate trajectory going forward are already major concerns. Adding to this, if the Department of Commerce decides to impose tariffs on module imports from Malaysia, Cambodia, Thailand, and Vietnam, we could be looking at a substantial dropoff in investment activity.”

Global VC funding in the solar sector in Q1 2022 came to $1.2 billion in 26 deals. A total of 58 VC investors participated in Q1 2022.

The top VC-funded deal in Q1 2022 was the $375 million raised by Palmetto. Of the $1.2 billion in VC funding raised in 26 deals during Q1 2022, 94% went to solar downstream companies, with $1.15 billion in 20 deals.

Public market financing in the solar sector dropped 115%, with $2.5 billion in Q1 2022 compared to $1.2 billion in Q4 2021.

Announced debt financing in Q1 2022 totaled $3.8 billion compared to $1.6 billion in Q4 2021.

Four securitization deals brought in $1.1 billion in Q1 2022, a 137% increase compared to Q4 2021.

There were 29 solar M&A transactions in Q1 2022 compared to 43 in Q4 2021.

Over 23 GW of large-scale solar projects were acquired in Q1 2022 compared to 13.1 GW in Q4 2021. Large-scale solar project acquisitions in Q1 2022 were the second-highest recorded to date.

Project developers and independent power producers were the most active acquirers in Q1 2022, with 17 GW.

Seventy-five companies and investors are covered in this 89-page report.

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