SOURCE: Mercom Capital Group

Mercom Capital Group

April 07, 2016 13:00 ET

Total Corporate Funding in Solar Sector Drops to $2.8 Billion in Q1 2016, Reports Mercom Capital Group

Debt and Public Market Financing Decline; Residential/Commercial Funds Surge; Solar Securitization Deals Cross $1 Billion

AUSTIN, TX--(Marketwired - Apr 7, 2016) -  Mercom Capital Group, llc, a global clean energy communications and consulting firm, released its report on funding and merger and acquisition (M&A) activity for the solar sector in the first quarter of 2016.

Total corporate funding, including venture capital/private equity (VC) funding, public market and debt financing, into the solar sector in Q1 2016 dropped to $2.8 billion (B) compared to $6.9B in Q4 2015.

"It's a tough environment out there," said Raj Prabhu, CEO of Mercom Capital Group. "Solar public companies in general have had a difficult time raising capital at depressed market valuations. Yieldcos, which accounted for significant financial activity in the debt and public markets last year, have faded this quarter. On the bright side, VC funding held up well, securitization deal activity picked up and residential/commercial funds raised a billion dollars in Q1."

Global VC funding for the solar sector came in at $406 million (M) in 23 deals.

Most of the funding in the first quarter of this year went to solar downstream companies with $333M in eight deals. Sunnova Energy's $300M raise was the largest deal.

Image: Solar VC Funding Q1 2015 -Q1 2016

The next largest deal was TenKsolar with a $25M raise. PosiGen raised $20M and Mercatus brought in $11.7M. Completing the Top 5 was NexWafe with $6.7M raised.

Public market financing activity fell of the cliff in the first quarter this year with $94M raised in four deals compared to $605M in eight deals last quarter. There were no IPOs this quarter. 

Announced debt financing also fell sharply this quarter with just over $2.3B in 19 deals.

Securitization deals continued to gain momentum, with $387M in three deals in Q1of 2016. Securitization deals in solar have now surpassed $1 billion globally

Funding continued to pour into residential and commercial solar funds for lease/PPAs, with $1B in six deals announced in Q1 2016 compared to $650M in three deals in Q4 2015. Since 2009, approximately $18B has gone into residential and commercial funds.

There were 14 solar M&A transactions this quarter, nine of which involved solar downstream companies. To compare, there were 13 transactions in Q4 2015. 

Project acquisition activity held steady this quarter with 50 transactions; about 2.4 GW of solar projects were acquired this quarter. Project acquisitions by yieldcos dropped to 234 MW in Q1 compared to 483 MW last quarter.

Image: Large-Scale Project Acquirers by MW in Q1 2016 (%)

Image: Solar Top 5 Project Acquisitions by Dollar Amount in Q1 2016

Mercom tracked 308 new large-scale project announcements worldwide in Q1 2016 totaling 13.8 GW.

To learn more about the report, visit: http://store.mercom.mercomcapital.com/product/q1-2016-solar-funding-report

About Mercom Capital Group
Mercom Capital Group, llc, is a global communications and research and consulting firm focused exclusively on clean energy and financial communications. Mercom delivers widely read industry funding and market intelligence reports covering Solar, Smart Grid, Battery Storage and Efficiency. Mercom's consulting division advises cleantech companies on new market entry, custom market intelligence and overall strategic decision-making. Mercom's communications division helps clean energy companies and financial institutions build powerful relationships with media, analysts, government decision-makers, local communities and strategic partners. For more information about Mercom Capital Group, visit: http://www.mercomcapital.com. To get a copy of Mercom's popular market intelligence reports, visit: http://mercomcapital.com/market_intelligence.php