Corporate solar funding stalls amidst COVID crisis as O&G firms drive M&A

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email

Corporate solar funding fell by 25% year-on-year to US$4.5 billion in the first half of 2020, but the decline could have been much starker, new analysis by Mercom Capital has found.

And there is yet more evidence that oil and gas majors are charging ahead with solar acquisitions, picking up about 6.5GW – equivalent to 45% – of solar assets to change hands in the first half of the year.

Mercom’s analysis puts total corporate funding – including venture capital (VC) funding, public market and debt financing – in the first six months of 2020 at US$4.5 billion, a 25% decline on the US$6 billion recorded in H1 2019. That figure is broadly equivalent with that recorded in H1 2017, indicating the scale of the setback to solar funding caused by the COVID-19 pandemic.

VC funding dropped dramatically, falling 74% year-on-year to US$210 million, the majority of which originated from the US$72 million raised by Sunseap Group. Public market financing fell by 24% year-on-year to US$758 million spread over six particular deals, while debt financing fell by around 16% to US$3.6 billion.

Raj Prabhu, chief executive at Mercom Capital, said that financial activity recorded in the first half of the year “reflects the realities on the ground”.

“Even though solar stocks have performed well, and corporate funding in Q2 looked slightly better because of several securitization deals, global economies and solar activity are still far from being back to where they should be,” he said, adding that project acquisition activity, often regarded as a sign of sector health, fell dramatically in Q2 2020 as the pandemic and subsequent economic crisis began to bite.

While project acquisition activity was actually up in H1 2020 compared to the same period in 2019, activity dropped starkly in Q2. Just ~3GW of solar projects were acquired in the three months of Q2, almost half the 5.7GW of acquisitions recorded in Q2 2019.

Oil and gas majors were the chief drivers of such activity however, taking on 45% of projects to have changed hands in the first half of the year.

Solar and the wider renewables economy has not been immune to the pandemic and resultant economic shock. Most estimates for solar deployment have been revised down in the crisis’ aftermath, while numerous companies in the space have reported delays to project completions and financing deals such as power purchase agreements.

But, Prabhu said, given the severity of the crisis and the impact seen in other sectors, “it could have been worse”.  

Solar indeed finds itself at the centre of a large number of economic recovery programs, especially in Europe where billions of investment is being lined up to hasten utility-scale solar deployment, pair the technology with hydrogen generation and establish continent-wide rooftop programmes to empower consumers.

1 February 2022
As Solar Finance & Investment enters its ninth year, we sit on the cusp of a new power market with solar at its heart. The 2022 edition of the event will build on our years of expertise and relationships to bring investors and lenders together with top developers. Connect with leaders in the field and use exclusive insights to drive investment and development decisions for the future. Meet new and existing project partners at the largest gathering of European solar investors and lenders.

Read Next

December 1, 2021
Major US bank Wells Fargo has closed its maiden tax equity investment into a colocated solar-storage project currently under construction in New Mexico, US.
December 1, 2021
Tech major Amazon has added a further 2GW to its committed utility-scale solar PV capacity, adding projects in the US and Europe to its renewables portfolio.
November 30, 2021
Solar EPC company iSun is investing in US commercial PV project developer Encore Renewable Energy as part of efforts to accelerate its geographic expansion.
November 30, 2021
‘Solar Module Super League’ (SMSL) member Canadian Solar has raised US$150 million through a share offering, with proceeds set to help the manufacturer expand its energy storage arm.
November 22, 2021
With operational solar assets in certain markets advancing in years, the question about when and under what circumstances to repower them is becoming increasingly common. Alice Grundy looks at the key drivers behind repowering PV.
November 16, 2021
UK investment and asset management firm Low Carbon and US insurance company Massachusetts Mutual Life (MassMutual) have teamed up to build a global independent power producer (IPP) that has a stated target of 20GW of renewables by 2030.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
February 1, 2022
London, UK
Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal