High interest rates slowed global corporate solar funding in H2 2022

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With a US$500 million investment, Longroad Energy secured the second-highest venture solar capital deal in 2022. Image: Longroad Energy.

Higher interest rates in the second half of the year slowed down corporate funding in the global solar sector to US$24.1 billion in 2022, according to research from Mercom Capital Group.

Despite corporate solar funding – including venture capital funding, public market and debt financing – decreasing 13% over 2021’s US$27.8 billion figure recorded, the number of deals was higher, with 175 in 2022 versus 144 in 2021.

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The increase in interest rates resulted in lower solar public and debt financing, which were US$5.1 billion in 2022 (down 32% year-on-year) and US$12 billion (-24% YoY), respectively, Mercom said.

However, global venture capital funding had a strong year, with US$7 billion among 90 transactions, a 56% increase from US$4.5 billion and 58 deals in 2021.

“The war in Ukraine has accelerated demand for solar around the world and the Inflation Reduction Act has boosted the sector in the US. In 2022, we saw record venture capital and private equity funding; solar companies were acquired in record numbers; and solar projects saw its second best year for acquisitions,” said Raj Prabhu, CEO of Mercom Capital Group.

According to Mercom, renewables developer Intersect Power’s US$750 million funding was the highest venture solar capital deal in 2022, followed by US developer Longroad Energy’s US$500 million investment to support its business model shift from a “develop to sale” strategy. UAE-based Yellow Door Energy closed the podium with US$400 million.

Other top venture capital deals in 2022 include the US$375 million raised by residential solar platform Palmetto, US$350 million by US developer Agilitas Energy and US$350 million by US distribution generation developer Aspen Power Partners.

Mergers and acquisitions had a stellar year too, with 128 transactions recorded last year, the highest since 2010, with eight transactions exceeding US$1 billion. Utility-scale solar project acquisitions were down, with 268 in 2022 versus 280 recorded in 2021.

Meanwhile, project developers and independent power producers were the most active in solar acquisitions last year, with 35.7GW of solar capacity, followed by utilities, with 10.5GW of projects acquired, and investment firms and infrastructure funds, with 9GW.

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