Solar corporate funding for the first half of 2023 increased by 54% year-on-year to US$18.5 billion, with public market financing dominating the increase.
According to clean energy consulting firm Mercom Capital Group’s Solar Funding and M&A 2023 First Half Report, only US$12 billion was raised in H1 2022 in terms of total corporate funding, including venture capital (VC) funding, public market, and debt financing. The number of deals decreased by 12% year-on-year, with 80 deals in H1 2023 compared to 91 during the same period last year.
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Public market financing experienced a significant increase as the amount stood at US$6.7 billion in H1 2023, up from US$3.3 billion year-on-year, equivalent to a 103% increase. The number of deals increased from eight in H1 2022 to 14 in H1 2023 this year.
Solar VC funding activity in H1 2023 increased by only 3% year-on-year, with US$3.8 billion raised in 33 deals compared to US$3.7 billion raised in 53 deals in H1 2022. For example, independent power producer (IPP) Amarenco purchased a 90% stake in PV solar panel owner Infram from investment company M&G’s infrastructure equity investment arm Infracapital.
There were 48 solar mergers and acquisitions (M&A) transactions in H1 2023 compared to 53 transactions in H1 2022. Project developers and IPPs were the most active acquirers of solar projects in Q2 2023 as they acquired 5.5GW, followed by utilities with 3.9GW.
“Even amidst tightening financial conditions and high interest rates, solar financing activity has shown remarkable resilience in the first half of the year. Besides AI, cleantech is one of the few sectors still attracting VC interest. Demand due to the Inflation Reduction Act (IRA) is so strong that even interest rate-sensitive public market and debt financing in solar were also up year-over-year. The lack of easy money, however, affected M&A activity negatively,” said Raj Prabhu, CEO of Mercom Capital Group.