Solar funding sees a 25% drop but oil and gas firms among top acquirers

The total corporate funding in the first half of 2020 (1H2020) dropped 25 per cent to $4.5 billion, compared to $6 billion last year, even though a report says it could have been worse. The funding included venture capital funding, public market, and debt financing.

Indicating a deliberate shift towards clean energy, oil and gas majors were the major acquirers of solar assets in 1H2020, accounting for 45 per cent, or about 6.5 gigawatt (Gw) of acquisitions during the period.

“Financial activity in the first half of the year reflects the realities on the ground. Even though solar stocks have performed well, and corporate funding in the second quarter (Q2) looked slightly better because of several securitisation deals, global economies and solar activity are still far from being back to where they should be. Project acquisition activity, typically a sign of health in the sector, declined significantly in Q2,” said Raj Prabhu, chief executive officer, Mercom Capital Group, adding, “In all, it could have been worse, considering the severity of the crisis.”

A Mercom Capital report said global venture capital, private equity, and corporate venture capital in the solar sector was 74 per cent lower in 1H2020, with $210 million, compared to $799 million raised in 1H2019.

Debt financing activity in 1H2020 ($3.6 billion in 15 deals) was 16 per cent lower, compared to 1H2019, when $4.2 billion was raised in 27 deals. There were four solar securitisation deals totalling $1.06 billion in 1H2020. Cumulatively, $6.3 billion has been raised through securitisation deals since 2013.

Solar project acquisition activity was up in 1H2020 with 14.7 Gw, compared to 11.6 Gw acquired in the same period last year. Only about 3 Gw of solar projects were acquired in Q2 of 2020, compared to 5.7 Gw in Q2 of 2019.

Oil and gas majors were the major acquirers of solar assets in 1H2020 and accounted for about 6.5 Gw (45 per cent) of acquisitions, followed by investment firms with 6.1 Gw (41 per cent).

Large-scale solar project funding in 1H2020 came to $7.5 billion across 69 projects, compared to 1H2019, with $9 billion in 76 project-funding deals.

There were 25 solar merger and acquisition transactions in 1H2020, compared to 37 transactions in 1H2019. There were 36 large-scale solar project acquisitions in Q2 of 2020, compared to 56 in the first quarter of 2020. About 2.8 Gw of solar projects were acquired in Q2 of 2020, compared to 5.7 Gw in Q2 of 2019.

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