Mercom’s Solar Funding and Merger & Acquisition report for Q4 and all of 2019 showed a 20% investment increase over 2018, though the numbers are holding within consistent range since 2016. There were 117 deals that got $11.7 billion, versus about 140 deals raising $9.7 billion in 2018. In addition to company funding, announced large-scale project funding came to $16.1 billion in 152 deals in 2019 compared to $14.1 billion in 184 deals in 2018.
These growth rates parallel the roughly 15% to 20% growth in capacity deployed in 2019 versus 2018, and is similar to the 14% growth projected in 2020.
The report’s top VC-funded company, Renew Power, India’s largest independent power producer, raised $300 million from Goldman Sachs, the Abu Dhabi Investment Authority, and the Canada Pension Plan Investment Board. The company recently reported that it has 3.1GW and 1.9GW of operating wind and solar assets, respectively. Yellow Door Energy, a Middle Eastern commercial and industrial solar leasing and efficiency company, raised $65 million and hopes to build 300MW of solar power in the next two years.
In total, global funding for the sector came to $1.4 billion in 53 deals, a 1.6% increase compared to the $1.3 billion in 65 deals in 2018.
The report noted that project developers were very active in Q4 with 6.7 GW of project transactions, out of the year’s total of 26 GW in 192 large-scale solar projects that changed hands in 2019. Raj Prabhu, CEO of Mercom Capital Group noted that investment firms bought 1.7 GW of projects in the quarter. solidifying a trend:
Investment firms acquired over 30 GW of large-scale solar projects in the past five years, a reflection of solar’s attractiveness as a long-term, low risk investment.
In 2018, pv magazine USA reported that the US market actually had more money available for projects, than projects available – making us wonder where the industry bottlenecks are. As of this morning, these acquisitions are continuing with 8minute Solar Energy selling the 300 MWac/387MWdc Eagle Shadow Mountain Solar Project to Capital Dynamics. The facility has a long term contract with electric utility NV Energy to sell upwards of 900,000 MWh/year of electricity.
There were eight securitization deals totaling $1.6 billion in 2019, which was the largest amount of financing through securitization deals in the solar sector. Because of companies like Sunrun paying 99.1% on their long term packages, we’re finding that the U.S. market has an increasing comfort with this class. This is evidenced by Solar Mosaic’s recently printed $208 million residential Single A rated securitization that got a lower credit enhancement level of 17.28% relative to prior offerings – dropping to as low as 20.39% – as noted above.
The numbers are still much lower than the capacity-boom earlier last decade. That era displayed the aggressive scaling of the Chinese manufacturing market and a time when hardware was much more expensive.
The 100+ page report covers greater than 800 companies.
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