Yieldcos lead the way in Q2 solar funding - Mercom

Public market financing of solar companies reached a record US$2.3 billion in the second quarter of 2015, bucking an overall downward trend in corporate solar funding during Q2.

According to the latest analysis by research firm Mercom, public market financing of solar was up US$1 billion quarter on quarter, driven largely by activity in the yieldco segment.

However, overall activity in funding, and merger and acquisition activity in the solar sector saw a slump in Q2, falling almost 8% from US$6.4 billion in Q1 to US$5.9 billion.

In public market financing, Abengoa Yield led the way with the biggest deal of the quarter, a US$670 million private share placement in May. SunEdison, through its TerraForm Global yieldco, and Chinese manufacturer Risen Energy offered similar placements, raising US$335 million and US$408 million respectively.

Another key public markets event in the quarter was the IPO of 8point3 Energy Partners, the yieldco formed jointly by US manufacturer/project firms First Solar and SunPower. The yieldco’s NASDAQ flotation in June raised US$420 million.

Total finance raised by residential and commercial solar funds was up marginally in Q2, from US$1.92 billion to US$1.93 billion in five deals, the highest quarter to date. Of this total, US$775 million went to three loan funds and US$1.2 billion went to two third-party lease or power purchase funds. SolarCity announced US$1.5 billion in two separate deals.

But in other key areas tracked by Mercom, funding was down quarter on quarter. Large-scale project funding totalled US$1.9 billion across 26 deals in Q2, compared to US$2.5 billion across 29 deals in Q1.

The top project funding deal was the US$355 million raised by GE Energy Financial Services in a partnership with Pacifico Energy, for the development of a 96.2 MW solar PV project in Hosoe, Kyushi Island, Miyazaki prefecture, Japan.  

Venture Capital funding also dipped to US$142 million in 24 deals, compared to US$195 million in 27 deals in Q1 2015. Solar downstream companies continued to attract most of the VC funding with US$60 million in 13 deals.

Raj Prabhu, CEO of Mercom Capital Group, said: “Overall corporate funding was down slightly this quarter. Yieldcos had a significant impact on the financial activity in the sector and raised US$1.6 billion in public markets, about US$800 million in debt, and accounted for almost a third of all large-scale project acquisitions. Residential and commercial solar funds continue to attract record funding as the ITC [investment tax credit] expiration deadline approaches.”