Corporate funding in solar sector falls 18% in first nine months of 2022: Mercom Capital

The global corporate funding for the solar sector declined 18% to $18.7 billion in the first nine months of 2022 as compared to $22.8 billion during the same period last year owing to inflation and high-interest rates, according to a report by Mercom Capital. 

Moreover, during the first nine months of this year, the solar debt financing activity declined by 42% to $8.3 billion in 48 deals, compared to $2.2 billion in 50 deals during the same period last year. The report includes data from 227 solar companies and investors. 

However, the number of deals advanced to 17% at 131 in the first nine months of 2022, compared to 112 in the same period last year. During the first nine months, the venture capital funding witnessed a surge of 150% with $5.5 billion compared to $2.2 billion.  

Meanwhile, the top venture capital-funded companies include US-based Intersect Power at $750 million, US-based Longroad Energy at $500 million, US-based Palmetto at $375 million, China-based Gokin Solar at $360 million, US-based Agilitas Energy at $350 million and Kenya-based Sun King at $260 million. 

“Corporate funding in 9M 2022 is behind pace year-over-year, impacted by inflation and high-interest rates but is still ahead compared to the previous six years. There is renewed momentum after the passing of the Inflation Reduction Act,” says Raj Prabhu, CEO of Mercom Capital.

“We have seen a resurgence in VC and private equity funding, breaking funding records since 2010. There is no longer any doubt about the growth potential of the solar industry – it is now a race to acquire the right technology and portfolios to scale,” he adds. 

During the first nine months of 2022, eight securitization deals plunged 28% accounting for $2.3 billion, compared to $3.2 billion in 11 deals in the same period last year. However, since 2013, more than $13.4 billion has been raised through securitization deals cumulatively.

In the first nine months of 2022, the total project acquisition for 52GW stood at compared to 200 projects acquired for 55.5 GW in 9M 2021. There were 90 solar mergers and acquisitions (M&A) transactions in the first nine months of 2022 compared to 83 transactions in the same period last year.

The development comes at a time when countries across the globe have been pushing for renewable energy in order to curtail carbon emissions. Several domestic companies including Adani Group and Reliance Industries have announced their plans for renewable energy expansion. 

Adani Enterprises has pledged to invest $70 billion in green energy transition and infrastructure projects. Moreover, Mukesh Ambani-led Reliance Industries has also pledged an investment of more than $82.2 billion in the green energy space.