Mercom Capital Group, a global clean energy communications and consulting firm, released its annual report on funding and merger and acquisition (M&A) activity for the solar sector in 2023.
Total corporate funding, including venture capital (VC) funding, public market, and debt financing into the solar sector, came to $34.3 billion in 2023. This was the largest amount raised in over a decade.
"Investments into solar continue to defy expectations. Despite high interest rates and challenging market conditions, corporate funding in the sector was the highest in a decade. Debt financing also hit a decade high, and venture capital investments and public market financing recorded the second-highest amounts since 2010. Driven by the Inflation Reduction Act, the global focus on energy security, and favorable policies worldwide, solar continues to attract significant investments," said Raj Prabhu, CEO of Mercom Capital Group.
Global VC and private equity funding in the solar sector in 2023 came to $6.9 billion. There were 26 VC funding deals of $100 million or more in 2023. 68% of the funding went to 42 Solar Downstream companies.
The top VC-funded companies in 2023 were 1KOMMA5° ($471 million), Enfinity Global ($428 million), Silicon Ranch ($375 million), CleanMax Solar ($360 million) and Juniper Green Energy ($350 million).
Public market financing in 2023 totaled $7.4 billion, 45% higher than the $5.1 billion in 2022.
In 2023, announced debt financing reached $20 billion, 67% higher YoY and the highest amount raised since 2010.
There were 96 corporate M&A transactions in 2023 compared to 128 in 2022. Solar Downstream companies led corporate M&A activity in 2023.
"While funding activity has been strong, macroeconomic and geopolitical uncertainties, recession worries, and elevated interest rates have significantly slowed down both corporate and project M&A activity in 2023," noted Prabhu. "Higher borrowing costs have put a damper on M&A transactions, with cautious investors biding their time for more favorable valuations. Solar projects continue to attract interest, but high valuations and a lower risk appetite, compounded by unpredictable project completion timelines due to interconnection delays, labor shortages, and scarcity of components, have all contributed to a drop-off in project M&A activity," Prabhu elaborated.
Solar Downstream companies led corporate M&A activity in 2023.
In 2023, almost 45.4 GW of solar projects were acquired compared to 66 GW in 2022, with 35% of the total being acquired by Project Developers and IPPs.
