Corporate solar funding reached ten-year high in 2021 as M&A activity soared

Last year saw 69GW of large-scale solar projects acquired, according to Mercom Capital Group. Image: BayWa r.e.

Corporate funding in the global solar sector reached a ten-year high in 2021 as the industry recovered from a COVID-affected 2020, new research from Mercom Capital Group reveals.

Spanning venture capital and private equity, debt financing and public market financing, total corporate solar funding last year came to US$27.8 billion from 144 deals, almost double the US$14.5 billion raised in 2020, the consultancy said in its 2021 Solar Funding and M&A Report.

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Mergers and acquisitions (M&A) activity soared to reach 126 transactions in 2021 – the highest number of deals ever recorded – with most agreements involving downstream solar companies.

The top M&A transaction last year, Mercom said, was Indian solar developer Adani Green Energy’s acquisition of SB Energy India, valuing the renewable energy company at US$3.5 billion.

In terms of large-scale solar project acquisitions in 2021, there was a 21% hike on 2020, with 280 plants changing hands, representing 69GW of installations globally. Project developers and independent power producers were said to be the most active acquirers in 2021, with almost 34GW of solar projects purchased, followed by oil and gas majors, which bought 13.8GW of plants.

Venture capital (VC) and private equity funding in the solar sector jumped from US$1.2 billion in 2020 to US$4.5 billion last year, when there were 11 VC funding deals of more than US$100 million.

According to Mercom, the top VC-funded solar companies in 2021 were GoodLeap (formerly Loanpal), a residential solar loan provider that raised US$1.6 billion in two separate transactions, followed by independent power producer Silicon Ranch, which secured US$775 million in new equity capital.

In an interview with PV Tech Premium last week, Silicon Ranch detailed how the company plans to deploy capital to support its strategy of co-locating solar plants with regenerative agriculture.

Mercom said the next largest VC deal last year were software provider Aurora Solar securing US$250 million, followed by developer Nexamp bagging US$240 million, German solar installer Enpal receiving US$175 million and the US$150 million raised by racking and tracking manufacturer GameChange Solar.

Raj Prabhu, CEO of Mercom Capital Group, said financing activity across the sector bounced back strongly following 2020. “There was more money than ever chasing deals and more demand than supply of attractive companies and assets as organisations and funds look to fulfil their ESG and clean energy mandates.”

Record securitisation activity was a key contributor to the rise in solar debt financing last year, which increased 91% on 2020 to US$15.8 billion, Mercom said.

Public market financing, meanwhile, was up 49% to US$7.5 billion, with the largest deal from balance of system solutions provider Shoals Technologies, which raised US$2.2 billion through its initial public offering.

Ten solar companies globally went public last year through IPOs and deals with special purchase acquisition companies, according to Mercom.

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