Corporate financing in the solar sector fell by almost US$7 billion in the first nine months of 2024 compared with the same period last year, according to clean energy research firm Mercom Capital Partners.
At the end of September, total global corporate funding for the sector stood at US$22.3 billion, down from US$28.9 billion at the same point in 2023. Mercom said the total number of deals decreased by 6% year-on-year (YoY) from 124 deals in 2023 to 117 this year.
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Mercom focuses “exclusively” on markets in the US, Europe, India and the Middle East.
Debt financing is the only market segment in which Mercom found a YoY increase. From January to September this year, the solar sector saw US$16.7 billion in debt financing, up US$700 million from US$16 billion last year. The number of deals also increased, up to 68 compared with 54 in 2023.
This growth in debt financing has significantly slowed from the last two years, however. 2023 saw a 93% YoY increase in debt financing and a significant increase in the size of the transactions being made.
Other sectors which Mercom identified—Venture Capital (VC) funding, Public Market funding and Mergers & Acquisitions (M&A) financing—were all down compared with 2023.
VC funding totalled US$3.5 billion in 39 deals, down from US$5.5 billion in 51 deals. Downstream companies once again dominated the VC funding with 32 deals worth US$3.3 billion. US solar and storage developer Pine Gate Renewables received the most VC funding of any company in the sector, US$650 million from investor Generate Capital.
Public market financing came to US$2.1 billion in 10 deals, down significantly from US$7.2 billion in 19 deals last year.
There were 62 M&A transactions executed in the first three quarters of the year, compared with 75 in the same period in 2023.
Moreover, 166 solar project acquisitions took place for a collective 28.3GW of capacity. Mercom said that investment firms were the most active acquirers of solar projects in Q3 2024.
‘Significant uncertainties’
Raj Prabhu, CEO of Mercom Capital Group, said the decline in investment was due to “significant uncertainties” facing the solar sector.
“Regulatory concerns around antidumping and countervailing duties and tariffs, the U.S. Section 45X guidance, potential policy shifts due to election outcomes, unpredictable global trade policies, supply chain disruptions, higher costs, tight labour markets, and ongoing project delays have all dampened investor confidence and delayed key investment decisions,” said Prabhu.
“While the recent 50 basis points rate cut is hopeful, the market needs more clarity and direction on future rate cuts to spark a resurgence in investment momentum.”
