‘Pronounced slowdown’ in corporate solar funding as inflation bites

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A PV plant from Reden Solar. Image: Reden Solar.

Corporate funding in the global solar sector in the first half of 2022 was down 11% year-on-year as activity dropped especially during Q2, according to research from Mercom Capital Group.

The consultancy revealed in a new report that although the number of deals was up 28% to 91 on H1 2021, total corporate solar funding fell from US$13.5 billion to US$12 billion.

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There was a “pronounced slowdown” in activity between Q1 and Q2 2022, according to Raj Prabhu, CEO at Mercom Capital Group.

“The current state of the economy – inflation, higher interest rates, supply chain issues – has started to impact fundraising in the solar sector,” he said, having previously warned of “significant headwinds” facing the industry at the end of Q1.

Solar public market financing in 1H 2022 came to US$3.3 billion from eight deals, 10% lower than the US$3.7 billion figure recorded from 13 deals during the same period last year. Announced solar debt financing in the first half of 2022 plummeted 39%, according to Mercom.

However, venture capital funding activity in the solar sector maintained growth during H1 2022 to reach US$3.7 billion, more than double the same period last year, with 89% of funds raised going to downstream companies.

Mercom said the top solar venture capital deals in H1 2022 were US$750 million raised by developer Intersect Power, US$375 million secured by residential solar platform Palmetto, US$350 million bagged by PV and storage developer Agilitas Energy and US$260 million raised by off-grid specialist Sun King.

In terms of solar M&A deals, there were 53 during the first half of 2022 – compared with 54 in H1 2021 – with the largest being the acquisition of Reden Solar in March which valued the French independent power producer at €2.5 billion (US$2.7 billion).

The report revealed there were project acquisitions totalling 38GW of solar capacity in H1 2022, down on 40GW in the prior-year period.

Developers and independent power producers were the most active acquirers of solar projects in Q2 2022, picking up 4.1GW, followed by oil and gas majors (4GW) electric utilities (3.4GW) and investment firms (1.6GW).

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