Solar venture capital increases, but upstream companies continue to struggle

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Solar venture capital investments increased by over US$60 million in the second quarter of 2013, having hit a record low in the first part of the year.

According to quarterly analysis by Mercom Capital, deals totalling US$189 million were completed in Q2 compared to US$126 million in Q1.

However, the increase leaves the amount of venture capital flowing into the industry still substantially lower than the same quarter last year, when deals topped US$376 million.

According to Mercom, upstream technology companies continue to struggle in securing venture capital, with downstream companies attracting US$128 million of the Q2 deals.

“With solar technology companies struggling, investments have been going to downstream companies,” said Mercom chief executive Raj Prabhu.

“That said, investments into solar technology companies haven’t completely dried up. Small venture rounds are still going to several niche technology companies instead of the larger deals that were typical for thin film, CSP and CPV companies.”

Among the largest VC deals of the quarter, Mercom singled out the US$69 million raised by Chinese solar developer Hefei Gold Sun Energy Technology from investor Jiangsu Akcome Solar Science & Technology.

Clean Power Finance, a provider of third party financing for distributed PV projects, raised $42 million from Edison International, Kleiner Perkins Caufield & Byers, Google Ventures, Claremont Creek Ventures, Clean Pacific Ventures, Sand Hill Angels, Hennessey Capital, Duke Energy and two other investors.

Indeed, as in Q1 of this year, third party finance companies continued to fare well in Q2, raising a record US$1.33 billion in residential and commercial solar project funds.

Mercom said this was the strongest ever quarter for solar lease funds, with the total amount raised in the first six months almost equivalent to all the solar lease funds raised last year.

Meanwhile, announced large-scale project funding in Q2 2013 came in at $2.94 billion, Mercom revealed, up from $1.77 billion last quarter.

Among the big stories, Mercom cited Solar Star Funding, the wholly owned subsidiary of Warren Buffet’s MidAmerican Energy, which completed a $1 billion bond offering this quarter, the largest solar bond financing deal to date.

More than 670MW of disclosed project changed hands in the second quarter of 2013, with the top five ranging in size from 30 to 150MW. First Solar’s acquisition of the 150 MW Solar Gen 2 Project in California was the largest.

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