Solar energy funding jumps $3 billion despite lower deal volume

17 October 2019 Consultancy.uk

Corporate funding of solar energy has spiked by 34% during the first nine months of 2019, when contrasted with the same period last year. Globally, the sector attracted some $9 billion in investment before the end of September.

While public awareness of the issue seems to have gone through a rapid renaissance in the last year, a recent report from PwC found that global governments and corporations are still dragging their feet on the matter, with dire consequences. According to the latest Low Carbon Economy Index, decarbonisation has stalled worldwide, as fossil fuel energy continues to be used to meet rising energy demand, leaving businesses and states facing huge challenges to manage the escalating risk of disruption from extreme weather.

Following this, however, another study has since found an encouraging sign, which could show that decarbonisation may be set to escalate in the near future. The research from clean energy consulting firm Mercom Group has analysed funding, mergers and acquisitions by corporates in the solar industry, to find that funding for the renewable power source has ramped up by more than a third compared to 2018’s figures.

Solar Corporate Funding

Headquartered in Austin, Texas, Mercom is a thought leader in the clean energy sector, delivering in-depth knowledge in cleantech and healthcare information technology marketplaces. Mercom's research and consulting division provides market intelligence, industry reports and consulting services for companies in cleantech and healthcare IT industries.

The firm’s study found that in the first nine months of 2019, total corporate funding of solar energy – which includes venture capital/private equity, public market, and debt financing – was boosted to a total of $9 billion raised, compared to the $6.7 billion in the same period last year. This constitutes a 34% increase year-over-year, as well as the highest disclosed haul since 2015.

The amount is still well behind the figure from 2015, or around $170 billion – and the number of deals in the sector has declined drastically since then. This suggests that the value of the investments is yet to increase to compensate for the decline in volume. Still, Mercom asserts that this is a step in the right direction.

Raj Prabhu, CEO of Mercom Capital Group, said of the findings, “Corporate funding activity so far this year is ahead of last year’s levels as demand outlook looks positive, and solar public companies continue to do well. In Q3 2019, over $100 million in venture funding went to technology and manufacturing-focused companies which is rare. Five IPOs and over a billion dollars in securitization deals so far this year have been the highlights.”

While the global picture is encouraging, however, the UK’s renewable market is blighted by uncertainty. The UK’s renewable scene has seen its favourability slide among investors, who are especially apprehensive about the UK Government’s backing away from solar power.

In late 2018, a paper from EY charting 40 countries’ attractiveness as a destination for renewables investment saw the UK’s reputation in a state of decline, with researchers suggesting the slide could be attributed to the possibility that many in the power sector fear a No Deal Brexit could impact electricity exports and the cost of technology imports.


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