Mercom: $34.3 Billion Corporate Solar Funding In 2023

• Mercom Capital Group says corporate funding raised in 2023 added up to $34.3 billion
• VC and private equity funding totaled $6.9 billion, while public market financing was $7.4 billion
• Corporate and project M&A activity declined due to macroeconomic and geopolitical uncertainties, recession worries, and elevated interest rates

Mercom Capital Group counts total corporate funding in solar sector in 2023 to have grown by 42% YoY, making it the year when the largest amount was raised in over a decade. Despite high interest rates and challenging market conditions, it says the industry raised $34.3 billion last year.

This compares with 175 deals bringing in $24.1 billion in 2022 (see Global Solar Raised $24.1 Bn Corporate Funding In 2022).

Total venture capital (VC) and private equity funding added up to $6.9 billion, out of which $4.7 billion went to 42 solar downstream companies. The largest VC deal of the year 2023 was $471 million raised by 1KOMMA5°, followed by $428 million for Enfinity Global, and $375 million by Silicon Ranch.

Public market financing recorded the 2^nd highest amount since 2010 with a total of $7.4 billion, representing 45% annual growth.

Announced debt financing rose to $20 billion with a 67% annual jump, thanks to securitization.

"Investments into solar continue to defy expectations," said Mercom Capital CEO Raj Prabhu. "Driven by the Inflation Reduction Act, the global focus on energy security, and favorable policies worldwide, solar continues to attract significant investments."

M&A activity dropped 25% YoY with 96 corporate deals in 2023, compared to 128 in 2022. A total of 45.4 GW of large-scale projects exchanged hands in 2023 with 35% acquired by project developers and IPPs. This compares to 66 GW in 2022.

Prabhu blames macroeconomic and geopolitical uncertainties, recession worries, and elevated interest rates to attribute the slowdown in corporate and project M&A activity in 2023.

He explained, "Higher borrowing costs have put a damper on M&A transactions, with cautious investors biding their time for more favorable valuations. Solar projects continue to attract interest, but high valuations and a lower risk appetite, compounded by unpredictable project completion timelines due to interconnection delays, labor shortages, and scarcity of components, have all contributed to a drop-off in project M&A activity."

Complete Mercom report titled Annual and Q4 2023 Solar Funding and M&A Report can be purchased from its website.