Solar corporate funding increased globally by 43 percent in Q3/2020

Mercom Capital Group, llc, a global clean energy communications and consulting firm, released its report on funding and merger and acquisition activity for the solar sector in the third quarter (Q3) and the first nine months (9M) of 2020. Accordingly, corporate funding globally (including venture capital, private equity, public market, and debt financing) in the solar sector in Q3 2020 came to $3.2 billion, compared to $2.3 billion in Q2, a 43 percent increase quarter-over-quarter. Funding was also higher by 8 percent year-over-year compared to the same quarter last year.

However, corporate funding was still 13 percent lower in January – September 2020 (9M of 2020) with $7.9 billion compared to $9 billion raised during 9M 2019.
After declining in Q2, financing activity was up across the board, whether it was venture capital, private equity, public market, or debt financing. According to Mercom, it is a clear sign that the market is bouncing back after a prolonged shutdown. Solar stocks are on an incredible run so far this year. Of the 24 solar stocks Mercom tracks globally, 12 were up over 100 percent at the end of Q3.

Global venture capital funding (venture capital, private equity, and corporate venture capital) increased in Q3 2020 with $183 million in 15 deals compared to $65 million in five deals in Q2 2020, 182 percent growth quarter-over-quarter. Funding was lower by 12 percent year-over-year compared to $208 million raised in 11 deals in Q3 2019. In 9M 2020, venture capital funding in the solar sector was 61 percent lower with $394 million compared to $1 billion raised in 9M 2019.

The top VC deals in 9M 2020 were: $72 million raised by Sunseap Group, $50 million raised by Zero Mass Water, $40 million raised by Ecoppia, $37 million raised by Sunseap Group in a separate deal, and $35 million raised by Lumos.

Public market financing into the solar sector came to $1.3 billion in four deals in Q3 2020, 75 percent higher compared to $737 million raised in five deals in Q2 2020. Year-over-year, public market financing was up slightly (2 %) compared to the same quarter of 2019. Solar public market financing in 9M 2020 came to $2.1 billion in 10 deals, 9 percent lower compared to $2.3 billion in 13 deals in 9M 2019, says the study.

In 9M 2020, 42 corporate solar M&A transactions (11 disclosed for $7 billion) were announced, compared to 57 transactions (10 disclosed for $600 million) in 9M 2019. Seventeen solar M&A transactions (five disclosed for $6.8 billion) were executed in Q3 2020 compared to 13 in Q2 2020 and 20 transactions in Q3 2019. The largest M&A transaction in 9M 2020 was Sunrun’s acquisition of Vivint Solar, in an all-stock transaction for $3.2 billion.

According to the consultancy, even with COVID disruptions, project acquisition activity was up 52 percent in 9M 2020, with 24.3 GW of solar projects acquired, compared to 16 GW acquired in the same period last year. 9.5 GW of solar projects were acquired in Q3 2020, 244 percent higher compared to 2.8 GW in Q2 2020. In a year-over-year comparison, acquisition activity was 119 percent higher, with 4.4 GW acquired in the same quarter last year.