Off a cliff: Corporate solar funding drops by more than half
Total corporate funding, including venture capital funding, public market and debt financing, in the solar sector in Q1 2016 dropped significantly -- to $2.8 billion compared to $6.9 billion in the fourth quarter of 2015, a decline of about 59 percent quarter-over-quarter (QoQ), according to Mercom Capital Group.
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Click on image to enlarge. Credit: Mercom Capital Group |
"It's a tough environment out there," said Raj Prabhu, CEO of
Mercom Capital Group. "Solar public companies in general have
had a difficult time raising capital at depressed market
valuations. Yieldcos, which accounted for significant financial
activity in the debt and public markets last year, have faded
this quarter. On the bright side, VC funding held up well,
securitization deal activity picked up and
residential/commercial funds raised a billion dollars in Q1."
Global VC funding for the solar sector came in at $406 million
in 22 deals compared to $457 million raised in 17 deals in Q4
2015. Year-over-year, VC funding was up compared to Q1 2015 when
$195 million went into 27 deals.
Most of the funding in the first quarter of this year went to
solar downstream companies with $333 million in seven deals.
Public market financing activity fell of the cliff in the first quarter of 2016 with only $94 million raised in four deals compared to $605 million in eight deals last quarter and $1.3 billion in 10 deals in Q1 2015. There were no IPOs this quarter, compared to three in Q4 2015.
Debt financing also fell sharply this quarter with just over $2.3 billion in 19 deals -- the lowest since Q4 2014. By comparison, in Q4 2015 $5.8 billion was raised in 27 deals and Q1 2015 $4.9 billion was raised in 25 deals.
Securitization deals continued to gain momentum, with $387 million in three deals in the first quarter of 2016 alone. Securitization deals in solar have now surpassed $1 billion globally.
Funding continued to pour into residential and commercial solar funds for lease/PPAs, with $1 billion in six deals announced in Q1 2016 compared to the $650 million in three deals in Q4 2015. Since 2009, approximately $18 billion has gone into residential and commercial funds. There were 15 solar M&A transactions this quarter compared to 13 transactions in Q4 2015. Ten of the M&A transactions in Q1 2016 involved solar downstream companies.
This quarter's largest project acquisition by dollar amount was the $227 million acquisition of the 132 MW Alamo 7 solar project in Texas by ConEdison Development, from OCI (a Korean chemical company).
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