Even though 9M/2020 financing for solar wasn’t at the same level as last year, Mercom says during Q3/2020 solar financing activity picked up pace showing the market is bouncing back after facing challenges related to the pandemic in the first part of the year. (Source: Mercom Capital Group)
- During Q3/2020, global solar sector raised $3.2 billion, reflecting a sequential growth of 43% and annual growth of 8%
- It shows the market is doing better than it was in the first half; Mercom analysts say financing was up across the board
- Project acquisition activity especially was up in Q3/2020 which is an ‘important indicator of the financial health in the solar sector’
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In the first 9 months of 2020, total global corporate funding for solar declined 13% on annual basis to $7.9 billion compared to $9 billion the industry raised in 9M/2019, according to 9M and Q3 2020 Solar Funding and M&A Report of Mercom Capital Group (see Global Corp Funding In 9M/2019 Improved 34% YoY).
However, what was heartening is the 43% QoQ increase in funding amount in Q3/2020 adding up to $3.2 billion, compared to $2.3 billion raised during Q2/2020, and 8% more on annual basis. During H1/2020, global corporate funding for solar declined 25% YoY to $4.5 billion thanks mainly to the COVID-19 pandemic, according to the previous report of Mercom (see $4.5 Billion Total Corporate Solar Funding In H1/2020).
Mercom counts venture capital (VC), private equity (PE), public market and debt financing under corporate funding head for its report.
“After declining in Q2, financing activity was up across the board, whether it was VC, private equity, public market, or debt financing, a clear sign the market is bouncing back after a prolonged shutdown,” said Mercom Capital Group CEO Raj Prabhu. “Transactions in the works that could not make progress in Q1 and Q2 were getting closed in Q3, resulting in a funding surge. Project acquisition activity – an important indicator of the financial health in the solar sector, bounced back strongly in Q3.”
During Q3/2020, global venture capital funding went up 182% on QoQ basis to $183 million in 15 deals, but declined 12% on YoY basis, whereas in 9M/2020, the proceeds of $394 million reflected a drop of 61% compared to last year’s $1 billion. Largest amount raised by any company in 9M/2020 was $72 million by Sunseap Group from Banpu.
Under public market financing, global solar sector raised $1.3 billion in 4 deals during Q3/2020, 75% more on QoQ and 2% higher on YoY basis. During 9M/2020, this segment saw $2.1 billion in 10 deals as 9% less than $2.3 billion raised in 13 deals a year back.
Announced debt financing of $1.8 billion in 16 deals in Q3/2020 went up 20% QoQ and 16% YoY, but in the first 3 quarters the amount raised was 6% less on annual basis with $5.4 billion in 32 deals. Close to $1.6 billion were reported from 6 securitization deals in 9M/2020.
Out of 42 corporate solar merger and acquisitions (M&A) transactions in 9M/2020—with only 11 disclosed for $7 billion—the largest was Sunrun’s acquisition of Vivint Solar for $3.2 billion (see Sunrun’s Acquisition Of Vivint Solar Complete).
Project acquisition activity was robust in the first 9 months of the year, up 52%, with 24.3 GW acquired with 9.5 GW acquired in Q3/2020, rising 244% on QoQ basis and 119% increase over Q3/2019. Investment firms were the major acquirers, followed by project developers and independent power producers (IPP), utilities and oil & gas companies all taking over 4.2 GW, 3.8 GW, 912 MW and 514 MW, respectively.
“Solar stocks are on an incredible run so far this year. Of the 24 solar stocks Mercom track’s globally, 12 were up over 100% at the end of Q3 – an unprecedented number,” added Prabhu.
Full report by Mercom Capital Group can be purchased from its website for $299 to $499.