Solar’s emerging status as a low-risk investment choice has been underlined by analysis revealing a 175% surge in corporate funding to the global solar industry last year.
Annual analysis by consultancy Mercom of venture capital (VC), debt and public market financing to solar reported an increase from US$9.6 billion in 2013 to US$26.5 billion in 2014.
“The big story coming out of 2014 was the revival of capital markets – solar companies were able to access funding through multiple avenues like VC, public markets, IPOs and debt in record numbers, while the quest for lower cost of capital continued with yield cos and securitisation deals,” said Raj Prabhu, CEO of Mercom Capital Group.
“The solar sector has come a long way from being perceived as a speculative high risk investment to attracting investors based on low risk attractive dividend yields.”
According to Mercom, global VC investments performed particularly strongly last year, more than doubling to US$1.3 billion in 85 deals, compared to US$612 million across 98 deals in 2013.
Mercom said downstream solar companies saw the largest amount of VC funding in 2014 with US$1.1 billion across 44 deals, accounting for 85% of venture funding.
The top-five VC-funded companies in 2014 were residential solar provider, Sunnova Energy, which raised a total of US$505 million in three deals; residential provider Sunrun, which raised US$150 million; finance platform Renewable Energy Trust Capital, which brought in US$125 million; residential provider, Sungevity, which raised US$72.5 million; and GlassPoint Solar, a provider of solar steam generators to the oil and gas industry, which raised US$53 million.
Mercom said public market financing also performed strongly in 2014, almost doubling from US$2.8 billion to US$5.2 billion. Within this, seven market flotations including Vivint Solar, Scatec Solar, Thai Solar Energy and Sky Solar accounted for US$2 billion. Three yield-co IPOs, of Abengoa Yield, Terraform Power and NextEnergy Solar Fund, brought in US$1.5 billion.
Meanwhile large-scale project funding deals publicly announced in 2014 totalled US$14.2 billion in 144 deals, Mercom said. The largest project funding deal announced in 2014 was the US$942 million loan raised by China WindPower Group for a portfolio of projects totaling 800MW. Top investors in large-scale projects were Mizuho Bank with 12 projects and Bank of Tokyo-Mitsubishi UFJ with 10 projects.
Corporate M&A activity totalled US$4 billion in 2014 across 116 deals, with Hanwha Solar One’s US$1.2 billion acquisition of its sister firm Hanwah Q CELLS topping the chart as the largest acquisition of the year.