Total corporate funding into the solar sector rose 24% in 2020

Despite a slow start and a downturn in venture capital and private equity funding, total funding saw a significant rise, including the largest amount of projects acquired in a single year to date and the largest amount of securitization financing ever in a year.

January 11, 2021 Tim Sylvia

Global corporate investment in the solar sector came to $14.5 billion in 2020, representing 24% growth over the $11.7 billion raised in 2019, according to a new report from Mercom Capital Group.

The growth comes in spite of an especially bad first half of the year, with the uncertainty caused by the Covid-19 pandemic leading to funding being down 25% year-over-year in H1.

The rebound and recovery were driven in large part by publicly traded solar companies, with several initial public offerings and securitization deals creating what Mercom Capital Group CEO Raj Prabhu referred to as an “investment haven” in the uncertain Covid economy.

The solar exchange traded fund (ETF) significantly chipped into the H2 turnaround, rising 225%, with 15 solar stocks up over 100% in 2020. An ETF is

VC suffers a slight downturn

While total global solar funding rose in 2020, global venture capital and private equity funding in the sector fell to $1.2 billion in 41 deals, compared to $1.4 billion in 53 deals in 2019. Nearly all of this funding – $1.1 billion of it – went to 27 downstream companies.

Among these companies, India’s Ayana Renewable Power led the way, raising $390 million, followed by Silicon Ranch Corp., which brought in $225 million. Brighte, an Australian company, raised $76 million; Singapore’s Sunseap Group raised $72 million; and Aurora Solar and Zero Mass Water tied for fifth, each raising $50 million.

Of the VC funding that didn’t go to downstream companies, solar service providers raised $61 million, PV companies raised $17 million, balance-of-system companies brought in $15 million, thin-film technology companies raised $15 million, and concentrated photovoltaic companies raised $5.5 million.

Project acquisitions and other deals

Alongside all of the funding, 39.5 GW of large-scale solar projects were acquired in 2020, compared to 26.1 GW in 2019. According to the Mercom, those 39.5 GW represent the largest amount of projects acquired in a single year to date. The capacity came from 231 large-scale project acquisitions in 2020, compared to 192 such transactions in 2019.

There were also 62 mergers and acquisitions (M&A) deals in 2020 – compared to 65 in 2019 – most of which involved downstream companies. No surprise, the largest transaction in 2020 was Sunrun’s $3.2 billion, all-stock acquisition of Vivint Solar.

Debt financing came to $8.3 billion in 2020, a 6.4% increase over 2019. Eight securitization deals totaling $2.2 billion were recorded in 2020, which Mercom said represented the largest amount of securitization financing ever in a year.

Finally, public market financing saw an exponential rise, up 101%, with $5.1 billion in 2020. Array Technologies raised $1.2 billion in its initial public offering in Q4 2020.

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