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Corporate funding into solar sector increases 175% to $26.5 billion

The Times of India:  January 19, 2015

Chennai :Total corporate funding into the solar sector increased 175% in 2014 to $26.5 billion compared with $9.6 billion in 2013, according to a report by Mercom Capital Group, a global clean energy communications and consulting firm.

The number includes funds from venture capital (VC)/private equity (PE), debt and public market financing sources.

Global VC investments more than doubled to $1.3 billion in 85 deals in 2014, compared to $612 million in 98 deals in 2013.

VC funding during the fourth quarter of 2014 totalled $315 million in 16 deals, compared to $87 million in 24 deals in fourth quarter of 2013.

"The big story coming out of 2014 was the revival of capital markets - solar companies were able to access funding through multiple avenues like VC, public markets, IPOs and debt in record numbers, while the quest for lower cost of capital continued with Yieldcos and securitization deals. The solar sector has come a long way from being perceived as a speculative high risk investment to attracting investors based on low risk attractive dividend yields," Raj Prabhu, CEO of Mercom Capital Group, said.

Solar downstream companies saw the largest amount of VC funding in 2014 with $1.1 billion in 44 deals, accounting for 85 percent of venture funding.

Investments in photo-voltaic technology companies reached $75 million in 12 deals and Balance of Systems (BoS) companies were close behind with $73 million in seven deals. Concentrated Solar Power (CSP) companies came in at $59 million in three deals, followed by thin film companies with $52 million in nine deals, the Mercom report said.

The top five VC funded companies in 2014 were Sunnova Energy, a provider of residential solar service to homeowners through its network of local installation partners offering leases and PPAs, which raised a total of $505 million in three separate deals, followed by Sunrun, a provider of residential solar-power systems and third party finance, raising $150 million; Renewable Energy Trust Capital, a finance platform established to acquire and own solar projects and provide a single equity capital source, brought in $125 million; Sungevity, a provider of residential solar installations and third party finance, raised $72.5 million; and GlassPoint Solar, a provider of solar steam generators to the oil and gas industry for applications such as Enhanced Oil Recovery (EOR), raised $53 million.

A total of 119 VC investors were active in 2014, with 12 investors participating in more than one round in 2014 including: Acero Capital, Acumen Fund, DBL Investors, E.ON, Ecosystem Integrity Fund, Novus Energy Partners, Omidyar Network, SolarCity, Sustainable Development Technology Canada, Trident Capital, Vision Ridge Partners and Vulcan Capital, the report said.

Public market financing increased to $5.2 billion in 52 deals in 2014, up from $2.8 million in 39 deals in 2013. In 2014, seven IPOs brought in more than $2 billion combined including, Vivint Solar, Scatec Solar, Thai Solar Energy and Sky Solar. Yieldcos accounted for three of the IPOs for $1.5 billion going to Abengoa Yield, Terraform Power and NextEnergy Solar Fund, according to data from Mercom.

Announced debt financing in 2014 totaled almost $20 billion in 58 deals, compared to $6.2 billion in 38 deals in 2013. China accounted for $15.8 billion of the debt activity.

Large-scale project funding announced in 2014 totalled $14.2 billion in 144 deals. The largest project funding deal announced in 2014 was the $942 million loan raised by China WindPower Group for a portfolio of projects totaling 800MW. Top investors in large-scale projects were Mizuho Bank with 12 projects and Bank of Tokyo-Mitsubishi UFJ with 10 projects, Mercom said.

Residential and commercial funds showed strong growth in 2014 with 34 announced funds totalling $4 billion. SolarCity, SunPower, Vivint Solar, SunEdison and Syncarpha Capital were top fundraisers in 2014.

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