Solar Energy Corporate Funding Sees Slowdown Through First Half of 2022

Solar Financing

(Credit: Pixabay)

by | Jul 19, 2022

Solar Financing

(Credit: Pixabay)

Continuing a trend of a slowdown in sustainability financing this year, corporate solar funding was down over the first half of 2022 compared with 2021, according to a report from Mercom Capital Group.

The report finds that outside of venture and private equity funding, all areas in the solar sector have seen a decline through the first half of the year. Total corporate funding and merger and acquisition activity of solar for the first half of 2022 with total funding reaching $12 billion, down 11% from the same period of 2021.

Those figures include venture capital funding, public market, and debt financing. The number of deals, though, increased 28% year-over-year with 91 transactions taking place so far in 2022.

The trends in the solar sector are in line with how all sustainability financing is looking so far in 2022. Overall, most sustainability financing is off record 2021 numbers, according to Refinitiv.

That comes as prices for renewable energy increase, as power purchase agreement rates are up 5.3% in the second quarter, according to LevelTen Energy. Solar prices are up 8%.

Despite those figures, the International Energy Agency expects solar to account for 60% of the increase in the world’s renewable energy capacity in 2022. More than 190 GW of capacity will be commissioned this year, the agency says, an increase of 25% from 2021.

“The current state of the economy – inflation, higher interest rates, supply chain issues – has started to impact fundraising in the solar sector,” says Mercom Capital Group CEO Raj Prabhu. “But the value of solar is more evident than ever to markets that are dependent on energy imports. Clean energy installation goals are being ramped up around the world and solar is a long-term beneficiary of this trend.”

According to the Mercom Capital Group report, throughout the first half of 2022, there were 53 solar mergers and acquisitions. There were also 148 solar project acquisitions with a capacity of 38 gigawatts.

The report says project developers and independent power producers were the most active in acquiring solar projects in the second quarter, obtaining 4.1 GW.

Venture capital funding in solar rose to $3.7 billion over 53 deals. Almost all of that went to solar downstream companies worth $3.3 billion. Overall, 145 venture capital investors participated in solar funding through the first half of the year.

Solar debt financing activity amounted to $5 billion. Solar public market financing came to $3.3 billion, and there were five securitization deals worth $1.4 billion.

The report covers 391 companies and investors and looked at all areas of solar financing. These include large-scale project funding, third-party commercial funding, new clean tech, and solar funds, and project costs per megawatt.

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