Mercom Capital Group, llc | www.mercomcapital.com | solar@mercomcapital.com
2013 First Quarter Solar Funding and M&A Report
Executive Summary
– The slump in VC funding, which started in Q3 2012 continued with VC investments in Q1 2013
totaling $126 million in 26 deals compared to $220 million from 27 deals in Q4 2012. This is the
second lowest quarter for VC funding since 2008.
– Deal count for the quarter was on par with the previous quarter, indicating interest in solar
investments but through smaller deals. Thirty investors participated in 26 deals.
– Funding is still available for companies with innovative technologies and intellectual property
(IP) but VC risk appetite for larger deals is extremely low compared to previous years.
– There were more than 1 GW of solar projects that changed hands in the first quarter of 2013.
Announced project acquisitions totaled just $137 million in 19 transactions, most of which did not
disclose transaction details. In comparison, project acquisitions totaled $297 million in 17
transactions in the previous quarter. Active acquirers this quarter included investment funds,
project developers and utilities.
– EAM Solar, a Norwegian investment company that acquirers and operates solar plants,
completed its IPO with $19 million raised this quarter.
– The Top 5 VC deals this quarter were OneRoof Energy’s $30 million round, followed by
Sungevity with $28 million, eSolar with $12.8 million, crystalsol with $11 million and Goal Zero
and PsomasFMG with $7 million each.
– Solar downstream companies received the most VC funding this quarter with $75 million in eight
deals.
– With 14 thin film bankruptcies in 2012 alone, VCs are now shifting away from thin-film
(particularly CIGS), which had traditionally attracted most of the VC funding. Thin film companies
have recorded approximately $1.4 billion in VC funding since 2010, with CIGS companies alone
comprising over $1 billion of that since 2010.
– Among downstream companies, the solar lease subcategory received $58 million in VC funding
this quarter. These third party finance/solar lease firms use unique financing models that remove
the biggest hurdle in solar installations – large upfront costs of residential and commercial solar
systems.
– Third party finance/solar lease companies raised $463 million in disclosed residential and
commercial project funds this quarter. Mercom has tracked approximately $5 billion in disclosed
solar lease funds to date in 41 deals. Of that $5 billion, $4.8 billion were raised in the United
States.
– Large-scale Japanese solar projects are starting to get developed, fueled by one of the most
generous feed-in tariffs in the world.
– Three large-scale project funding transactions came out of the emerging markets of India and
Chile. This indicates banks are becoming increasingly comfortable with large-scale project
financing in emerging markets. Chile’s emergence is emblematic of the potential hot market in
South America.
– Loans, credit facilities and other types of debt agreements from Chinese banks to Chinese solar
companies now stands at approximately $53 billion since 2010.
– M&A activity in solar this quarter amounted to $306 million in 15 transactions, although half of
those were undisclosed. M&A strategies this quarter fell into three categories: 1) acquisition of
downstream players to either acquire project pipelines or create a captive market for their
products, 2) acquisition of technologies and IP, and 3) acquisition of distressed
assets/companies.
Source: Mercom Capital Group, llc