Residential and Commercial Solar Funds Raise Nearly $2 Billion in Q1

Corporate funding in the solar energy sector recovered strongly in the first quarter of 2015, surging 88 percent above the $3.4 billion posted in Q4 2014 to total $6.4 billion worldwide, according to Mercom Capital's Q1 2015 Solar Funding and Merger and Acquisition report.

Mercom's quarterly market research reports encompass corporate funding of solar energy from venture capital (VC), public markets and debt financings globally. Its latest quarterly report highlights the “maturing” of solar energy finance as the solar energy sector continues to gain confidence, credibility and legitimacy among banks, fund managers and other investors.

VC solar-sector funding dropped from $315 million across 16 transactions in Q4 2014 to $189 million in 26 transactions in Q1 2015. But residential and commercial solar energy funds turned in their best performance to date, raising nearly $2 billion in 10 deals. That's nearly double that for Q4 2014, in which they raised $1 billion across eight deals, Mercom highlighted.

Strong quarterly rebound in solar-sector finance

Solar-sector debt financing also rose sharply quarter-over-quarter, shooting up 233 percent in Q1 2015. As compared to the debt financing total of $1.5 billion posted in Q1 2014, the first quarter of this year saw about $5 billion raised via debt issuance in 27 transactions.

In addition to the sharp rise in global solar-sector debt finance, solar energy companies raised $1.26 billion across 10 public market financings in the first quarter of 2015, according to Mercom's latest quarterly report. SolarEdge's NASDAQ IPO, in which it raised $126 million of equity capital, was the sole IPO during the quarter. Fremont, Calif.-based SolarEdge “is a balance-of-systems company that provides inverter, optimizer and monitoring solutions,” Mercom elaborated.

Circling back around to VC funding, Conergy raised $45 million from VC investment groups -- the largest solar-sector funding of its kind in Q1 2015. Filling out the top VC solar-sector funding deals of the quarter were NEXTracker raising $25 million; Fenix International raising $12.6 million; $12.5 million in VC funding raised by M-KOPA Solar; and Oxford Photovoltaics raising $12.3 million.

Along with solar-sector VC funding, large-scale project funding dropped to about $2.5 billion across 29 transactions last quarter. That compares to $3.4 billion in 33 deals Mercom registered for Q4 2014.

In terms of power capacity, new large-scale project finance announcements in Q1 totaled 7 gigawatts across 190 projects. Investors, and consumers, are getting a lot more “bang for the buck” as the cost of deploying solar energy systems continues to decline.

Other key takeaways from Mercom's Q1 2015 Solar Funding and M&A report include:

• Solar mergers and acquisitions activity in Q1 2015 came to $563 million in 29 transactions (eight disclosed), compared to Q4 2014 with $2.2 billion in 21 transactions (eight disclosed);


• Project acquisition activity remained robust this quarter with 44 transactions (20 disclosed) for a total of $953 million;


• About 2 gigawatts of solar projects was acquired in Q1.

Image credits: Mercom Capital